Indonesia’s basic metal industry, including steel, recorded strong growth in 2025. Expansion was supported by infrastructure development and downstream manufacturing demand. Production levels continued rising, strengthening Indonesia’s global position in steel output. However, capacity utilization remains relatively low, indicating uneven demand absorption. Policymakers are preparing protection and industrial deepening measures.
Key Facts & Background
- The basic metal industry, including steel, grew 15.71% in 2025, outperforming many manufacturing subsectors.
- Indonesia produced around 19 million tons of steel in 2025, placing the country 13th among global steel producers.
- National steel production has increased at an average annual growth rate of about 14% over the past six years.
- Industry utilization remains approximately 52.7%, indicating significant idle capacity across domestic mills.
- Demand growth is supported by infrastructure projects, manufacturing expansion, and downstream value-added industries.
- Structural deficits persist in intermediate and downstream steel products, with continued reliance on imported inputs.
- Global steel markets face overcapacity and potential dumping pressures, affecting domestic competitiveness.
- Policy responses include mandatory national standards (SNI), HGBT energy pricing, P3DN local content policies, fiscal incentives, and market protection measures.
Note: Multi-source AI data analytics, with the possibility of inaccuracies.
Insights
The 15.71% growth in Indonesia’s basic metal industry highlights steel’s role as a strategic backbone for infrastructure, construction, and manufacturing supply chains. Rising production to 19 million tons and consistent multi-year growth suggest strengthening industrial capacity and investment momentum. However, utilization at 52.7% indicates that capacity expansion has outpaced domestic demand, creating efficiency challenges. This gap implies that the industry’s long-term sustainability depends not only on production growth but also on downstream absorption and export competitiveness. The reliance on imported intermediate inputs further limits value-added capture within the domestic supply chain.
At the same time, global steel overcapacity and dumping risks complicate expansion prospects. Domestic producers face pricing pressure from imports, particularly in intermediate and specialized steel products. Policy tools such as SNI enforcement, energy cost support through HGBT, and local content requirements aim to strengthen domestic demand, but their effectiveness depends on consistent implementation and market conditions. The broader implication is that Indonesia’s steel industry is expanding but still transitioning toward deeper industrial integration. Sustained growth will hinge on improving utilization, reducing import dependence, and aligning capacity expansion with downstream manufacturing demand.