It will become a new growth point of global output in the future.
Indonesia enjoys the advantage of natural nickel resources, which creates favorable conditions for the rise of its stainless steel industry. In recent years, stainless steel enterprises have set up factories in Indonesia, which makes the production capacity of stainless steel in Indonesia expand rapidly. The rise of stainless steel industry in Indonesia has not only changed the global supply pattern of stainless steel, but also brought great impact on the development of stainless steel in other countries.
The output of stainless steel in Asia is growing rapidly.
From the perspective of the change of global stainless steel production, before 2007, the global stainless steel industry experienced a stage of rapid development. From 2007 to 2009, due to the impact of the global financial crisis, the demand for stainless steel fell sharply, the industry had relative overcapacity and production showed negative growth. From 2010 to 2016, global crude steel production returned to rapid growth, with China playing a leading role.
Among them, China's stainless steel production accounted for more than 50% of the world for the first time in 2014, and the integrated technology of RKEF (rotary kiln-submerged arc furnace) nickel-iron smelting and steelmaking has reduced the global cost of stainless steel production and led the technological revolution in the stainless steel industry. In 2016, with the implementation of supply-side structural reform in China's iron and steel industry, excess, illegal and backward production capacity was gradually eliminated, and the growth rate of China's stainless steel production slowed in the following years.
At the same time, under the initiative of "Belt and Road Initiative", in order to get rid of the restriction of raw material ferronickel, Chinese stainless steel enterprises began to lay out ferronickel projects in Indonesia and plan the construction of stainless steel industry chain. Indonesia overtook India to become the world's second largest producer of stainless steel in 2021 as Chinese companies built huge production capacity in Indonesia, according to forecasts from the (ISSF) annual meeting of the International stainless Steel Forum.
From the perspective of regional distribution, the increment of global stainless steel production in recent years mainly comes from China and Indonesia, and the production in Europe and America is relatively stable. Among Asian countries, the increase in production from Japan and South Korea is limited. In the global stainless steel production distribution, Asia, the European Union and the United States accounted for 53%, 33% and 9% of the global stainless steel production in 2006 and 81%, 13% and 4% respectively in 2020.
The output of stainless steel in Asia is growing rapidly. In 2006, the output of Asian countries mainly came from China, Japan and India, accounting for 18%, 14% and 7% of Asia's stainless steel production, respectively, while China's share rose sharply to 59% in 2016. India and Japan both reduced their share to 5%, but Indonesia's stainless steel production attracted global attention with a 5% share.
In terms of per capita stainless steel consumption, the per capita stainless steel consumption in China will be 18 kg in 2020, far exceeding the per capita stainless steel consumption of 2.5 kg in India and Brazil, but there is still a gap compared with the per capita stainless steel consumption of 25kg in South Korea, Italy and other countries.
Although China's per capita stainless steel consumption has been at a high level, the proportion of stainless steel consumption in steel consumption is relatively low, and there is still room for growth in the field of stainless steel consumption in China. In 2020, the per capita consumption of stainless steel in Indonesia is about 2 kg, which lags far behind other countries and has great potential for growth in the future. On the whole, the performance advantages of stainless steel and the amount of steel used per capita support the development prospect of stainless steel, while the supply of raw materials, the growth rate of demand and industrial profits will determine the progress of new stainless steel production capacity.
Strengthening the Management of Nickel Mine in Indonesia
Indonesia is located in tropical Southeast Asia, across the equator, has a special island tropical climate, its nickel reserves of about 21 million tons, accounting for about 24% of the world, ranking first in the world. In recent years, Indonesia is also actively developing mineral resources, and the output of nickel ore also ranks first in the world, accounting for about 34%. Indonesia's resource endowment provides many facilities for nickel mining: more than 90% of nickel laterite is concentrated on the central islands of Sulawesi (Big K) and Maluku (Little K) and nearby islands. Kalimantan and Sumatra have large coal and oil and gas resources, which provide low-cost raw materials and energy for the production of stainless steel in Indonesia.
Due to the low price of raw materials, the current cost of Indonesian nickel pig iron is 700yuan / nickel ton, and the hot rolling cost of 304stainless steel is 12000 yuan / ton, while the production cost of nickel pig iron in China is 1200 won 1500 yuan / nickel ton. The production cost of stainless steel calculated by the current nickel iron price is more than 18000 yuan / ton. Therefore, relying on the advantage of integrated red delivery of raw materials, the lowest production cost of stainless steel in the world has been transferred from China to Indonesia.
In the Indonesian government's development plan for 2020-2024, its five-year average GNI growth target is 5.7%, and it has achieved a structural transformation of industry, that is, from a big exporter of raw materials to a big modern manufacturing country. At the same time, the plan proposes to speed up the promotion of six pillar industries to promote the process of industrialization, including the metal smelting industry.
The Indonesian government plans to develop mid-and downstream industries, extend the industrial chain and increase the added value of industrial products in the form of supporting the construction of industrial parks. Therefore, Indonesia will completely ban the export of raw nickel ore from 2020, and increase tax incentives for enterprises investing in projects in Indonesia, so that the price of domestic nickel ore is on the low side and promote the development of the smelting industry. Data show that Indonesia's nickel pig iron production is 900000 tons of nickel in 2021, and the most optimistic forecast for 2022 is that the new nickel pig iron production capacity will reach 810000 tons of nickel, which will provide full support for the rise of the local stainless steel industry.
According to the speculation of the Indonesian Chinese Chamber of Commerce, in the future, Indonesia will also strengthen the smuggling management of nickel ore and strictly restrict the export of raw ore; plans to impose an export tariff of 2% on nickel pig iron and nickel iron, and impose a progressive levy according to the market; restrict the construction of low-grade smelting and processing plants, and no longer approve the construction of pyrometallurgical smelters; We will strictly rectify mining rights, and plan to combine exploration certificates and mining certificates into one, and extend the proportion of shares held by foreign mining rights.
Stainless steel production capacity ushered in a period of rapid development
Under the background of the mineral ban in Indonesia, more than 90% of Chinese nickel mines rely on imports from the Philippines, so steel companies are looking for a way out to lay out the "nickel iron-stainless steel" industry chain in Indonesia. With the strategic Dongfeng of Indonesia and the call of China's "Belt and Road Initiative", Chinese enterprises represented by Castle Peak are widely distributed in the Indonesian nickel industry. Delong Nickel, Jinchuan Group, Xinxing cast Pipe and Liqin have successively invested in the construction of stainless steel nickel iron projects in Indonesia, gradually forming industrial clusters, and stainless steel production capacity in Indonesia has ushered in a period of rapid development.
In 2016, 1 million tons of stainless steel crude steel production capacity was built in Aoyama, Indonesia. Since then, the production capacity has been increasing continuously, and Indonesia's stainless steel crude steel production capacity is expected to reach 6.5 million tons in 2021. According to the data, Indonesia's stainless steel production will be close to 5 million tons in 2021, and production is expected to grow by more than 30% in 2022, surpassing India to become the world's second largest stainless steel producer. Liqin plans to build a 3 million-ton stainless steel project in Indonesia. At present, the wet smelting project has been successfully put into production in May 2021, and the pyrometallurgical project has been put into production in January 2022. In addition, considering the potential new stainless steel production capacity brought by the extension of the industrial chain of a number of nickel-iron production enterprises, such as Xinxing cast pipe, Jinchuan, Indonesia Yilian, Indonesia Xinhua Union and Indonesia Zhenshi Oriental, Indonesia will become a new growth point of global stainless steel production in the future.
In the future, with the expansion of demand for stainless steel in emerging economies such as ASEAN and India, these countries and regions will become an important direction of stainless steel exports in Indonesia, while the impact of stainless steel on other countries and regions will be reduced accordingly. But fundamentally speaking, only by improving smelting technology to reduce costs and accelerate the optimization and upgrading of product structure, can we really face the impact of low-cost stainless steel in Indonesia and achieve high-quality development of our own industry.
