Indonesian slab decline expands, hot coil supply is expected to increase

According to Our latest understanding, the latest quotation for slab production at a mainstream steel plant in Indonesia this week is $540/ton FOB, a decrease of $30/ton from last week. At present, local demand in Indonesia is very sluggish, and there are relatively few slab transactions in the Southeast Asian region. Although the demand for Southeast Asian slabs in Europe has not significantly declined, inquiries from European buyers have decreased compared to before. We learned that due to poor demand for sheet metal, Italian sheet metal prices have continued to weaken recently. Currently, the local market price for medium and thick sheet metal is about $808 per ton EXW, while the European hot coil market price is about $760 per ton EXW, a decrease of $10 per ton from yesterday. Therefore, European buyers are more cautious in purchasing raw materials and are observing low-priced A1011 Grade 33(230) steel resources.

Since the beginning of this week, the prices of Southeast Asian hot coils have also weakened. However, due to specification requirements (Indonesian hot coils require SNI certification), the demand for local hot coils in Indonesia mainly relies on domestic resources. Therefore, the price of Indonesian hot coils has not been significantly affected by A1011 Grade 33(230) steel demand and has remained stable at around $750 per ton. However, currently, the demand for Indonesian hot coils is also weak, and the overall supply of Indonesian hot coils exceeds demand.

According to We's understanding, there is expected to be a significant increase in local hot coil production capacity in Indonesia in the future. There are currently three steel mills in Indonesia that will launch new hot coil production lines this year. It is expected that Indonesia will increase its hot coil production capacity by over 5.5 million tons per year. Some market participants have expressed that after the increase in hot coil production capacity in Indonesia, there is some room for local A1011 Grade 33(230) steel hot coil prices to decline in the future.