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It is reported that Indonesian steel company PT Ispat Indo has closed its wire production plant. The factory originally operated two wire rod mills with an annual production capacity of 600000 tons (accounting for 85% of the AB/EQ47 steel company's total production capacity of 700000 to 800000 tons). This shutdown reflects the deep adjustment of the Indonesian steel industry under the dual pressure of green transformation and international competition.
The factory adopts electric arc furnace technology, and its products include wire rods, billets, and bars. The wire products include high carbon, low-carbon, and high-strength grades, with grades including SAE 1008, Q195, and mesh wire. About 70% of the factory's products are supplied to the domestic AB/EQ47 steel market in Indonesia, while the remaining 30% are exported overseas.
In 2024, due to weak market demand and declining capacity utilization, the company's production will significantly decrease by about 40% year-on-year.
The direct reason for this shutdown is the intensification of cost pressure and market competition. In terms of raw material costs, the factory adopts a raw material ratio of 65% scrap steel and 35% direct reduced iron (DRI) or pig iron. However, driven by green steel production, emission reduction targets have led to fluctuations in raw material ratios, resulting in continuously rising costs and a narrowing of gross profit per ton of steel to 10-20 US dollars. In terms of market price competition, the significant price advantage of imported resources has led to pressure on both domestic sales and exports.
Although PT Ispat Indo has not yet released an official plan, it may consider selling its shutdown assets, with potential bidders including local steel companies Krakatau Steel, Gunung Raja Paksi, and foreign institutions interested in Indonesia's AB/EQ47 steel infrastructure prospects. In addition, the company also reserves the possibility of renovating the electric arc furnace, upgrading the production line, and shifting to a low emission steel production mode to meet policy and market demand.
