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Indonesian steel makers call for 10% export tax on steel slabs

The Jakarta Post reported that local steel producers are demanding that the government impose an export tax on semi-finished steel so that domestic needs can be met and the industry can produce the goods more efficiently.

Two major steel plate manufacturers PT Gunung Raja Paksi and publicly listed PT Gunawan Dianjaya Steel said a levy of around 10% would be necessary to help secure raw materials steel slabs domestically. At present, both still rely on cheaper imports from countries like Brazil, Japan, Russia and Ukraine. However, local supply would be preferable due to faster and flexible delivery.

Mr Raja Paksi president director Djamaluddin Tanoto said that “10% export tariff would be sufficient to effectively keep the raw materials in the country. That would reduce the gap of USD 50 per tonne between local and imported steel slabs at the current price. The government must issue a similar policy to China, which applies export tax on intermediary goods needed by the [downstream] industry whenever the producers do not want to supply it. A 25% tax charged by the Chinese government.”

Mr Gunawan Dianjaya corporate secretary Hadi Sutjipto said that “Even when the domestic price was slightly higher than imports, the firm would prioritize local sourcing. We actually prefer to get the material here because of proximity as well as faster and flexible delivery.”

Krakatau Posco now uses part of the steel slabs for further production at its steel plate mill and sells the rest to Krakatau Steel and local producers, including Raja Paksi and Dianjaya, as well as to overseas markets. Downstream producers consume around 2.6 million tonnes of steel slabs each year.

Ms Christiawaty Ferania Kaseger corporate secretary of Krakatau POSCO rejected the allegation that the firm sold the steel slabs at a lower price and said that our domestic sales price follows the market price in Indonesia and we don't sell our products at an irregular price. Ms Christiawaty further added that the price also depended on various factors, such as volume and the characteristics of purchases, for example spot versus long term purchases.