Irvan Kamal Hakim, Director at Krakatau Steel (Indonesia’s largest steel manufacturer), said that the domestic steel industry is still affected by prolonged concerns about excess steel supply in China, the world's largest steel producer. Amid slowing economic growth in the world’s second-largest economy, domestic steel demand in China has declined resulting in a global oversupply of 525 million tons. Each 1 percent decline in GDP growth in China results in an additional oversupply of 24 million tons of steel.

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Two giant Japan-based steel producers, Mitsubishi Steel Manufacturing and Nippon Steel & Sumitomo Metal Corporation (NSSMC), will invest a total of USD $450 million in Indonesia for an acquisition as well as for the establishment of a special steel factory. Mitsubishi Steel is to purchase a 34 percent stake (worth USD $37 million) in Indonesian special long steel producer Jatim Steel Manufacturing, while NSSMC and Indonesia's largest steelmaker Krakatau Steel agreed to form a joint venture to produce automotive flat steel in Indonesia.

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Domestic steel sales in Indonesia are expected to rise 6 percent y/y to 15.1 million tons in 2014. Meanwhile, the global average steel price has been USD $536 per ton this year, implying that the market value of Indonesian steel sales is to reach USD $8 billion this year. In recent years, the country’s steel sales have been rising on development of infrastructure, defense industry, and manufacturing. The sales are expected to continue rising in the years ahead due to commitment of the government to boost infrastructure development.

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