Welcoming the new year of 2023, the International Monetary Fund (IMF) predicts global growth will slow to 2.7% next year, but global inflation will likely decrease to 6.5% in 2023 and to 4.1% by 2024. This condition might be affected by several ongoing issues such as trade tension between US-China, geopolitical conflicts between Russia-Ukraine, and the possibility of Covid-19 resurgence or other new global health concerns. Despite these risks, many are still optimistic that the global economy will continue to recover as governments around the world try to implement monetary and fiscal stimulus to anticipate the economic crisis.
According to the Economist report, industries are also impacted by the combined factors above. Some governments in Europe were forced to diminish public sector investment to withstand higher prices. Meanwhile, the commodities sector such as Energy will benefit from the high prices. Amid the delayed trend in energy transition, Asia is predicted to lead renewable energy consumption by 11% next year.
At COP27, the country members pledged to new collaborative actions to speed up the decarbonization under five key breakthroughs agenda: power, road transport, steel, hydrogen, and agriculture. Meanwhile, the buildings and cement sectors are to be added to the breakthrough agenda next year. The action’s target of reducing 50% of global greenhouse gas (GHG) emissions is also designed to reduce energy costs and enhance food security.
Sustainability will remain a crucial issue to be discussed in the upcoming years. The shifting trend of point of view into sustainable development and combating climate change has made organizations agree to put their commitment to this. In addition, technological advancements are making the adoption of sustainable practices simpler and more affordable, which may further contribute to the trend toward greater sustainability.
Steel Industry’s Growth
Steel is essential to many sectors of the economy, including consumer goods, transportation, and construction. The demand for steel is closely tied to economic growth, given that the construction and manufacturing sectors are the primary steel consumers.
The World Steel Association estimated the steel demand for developed countries will increase by 1.1% in 2022 and 2.4 % in 2023, after its recovery by 16.5% in 2021. The overall steel demand will grow by 2.2 % to achieve the target of 1,881 million tons. Meanwhile, the national steel trade balance has increased the surplus in the past three years.
From the national point of view, Indonesia’s government wants to increase its national steel production capacity to 25 million tons in 2035. Utilizing the national steel industry’s capacity effectively, developing new technologies, and increasing investment are essential to this progress.
The absorption of domestic demand plays an important role in the growth of the steel industry. Indonesian Iron & Steel Industry Association (IISIA) stated Indonesia’s steel consumption is less than 70 kilograms (kg) of steel per capita per year. It is significantly less than South Korea’s consumption of 1,076 kg, China’s consumption of 667 kg, Japan’s consumption of 456 kg, and the United States’ consumption of 291 kg. This data concludes that the national steel industry still has the potential to grow bigger.
Steel contributes to 8% of emissions globally. On the other hand, the steel industry is showing more aggressive efforts to reduce carbon emissions. According to the MSCI ACWI Index, there are 17 companies that committed to becoming carbon neutral or net-zero by the year 2050. There are still significant economic and technological barriers to achieving these targets.
The subsequent carbon emissions are not limited to byproducts of burning coal energy but also a natural outcome of the chemical process used to transform iron ore into molten iron. Alternative low-carbon processes for making steel do exist. While others are still in development, some have recently begun to be commercialized.
Fulfill the Steel Demand for National Infrastructure Projects
78% of national steel consumption comes from the construction sector. The New National Capital City (IKN) development project and other national infrastructure projects have the potential to boost domestic steel demand. The IKN project needs steel supplies for about 9.2 tons with a value of Rp 150,5 trillion. As one of the biggest steel producers in the world, IISIA claimed that Indonesia’s steelmakers are ready to supply 100 percent of steel needs for the mega project.
As one of the notable steel suppliers in Indonesia, Gunung Prisma is ready to support the national infrastructure development by providing high-quality steel for multipurpose construction. With years of experience in the steel industry, it has integrated solutions for product procurement and deliveries.
Gunung Prisma owns six pillars of solutions to deliver the best quality steel to our customers: Custom Order Based, Dedicated PIC for Customer’s Needs, Best Product Services, Affordable High-quality Products, Real Time Tracking System, and Large Financial Resources.
With these pillars, Gunung Prisma can work closely with customers and suppliers to procure superior products, services, and breakthrough ideas.