SINGAPORE Few Indonesian
ferrous scrap consumers are willing to take the risk of buying
overseas material again more than six months after a
contamination scandal halted imports.
The local steel industry has
been facing a scrap shortage in recent months after customs
authorities began seizing thousands of containers carrying
scrap metals for alleged contamination by hazardous and toxic
The lengthy detainment of scrap
shipments at several Indonesian ports has reduced production
rates at many mini-mills in the country by as much as 50
"The detainments happened in
February, March, April and possibly May. Then, basically all
HMS (heavy melting steel) scrap couldnt be imported, so
(the melt shops) tried to get only shredded material, but the
supply is limited. Its not 100-percent safe, too," a
source at a melt shop in Gresik, East Java, told AMM
sister publication Steel First. "Some companies also
cant get a renewal licence for importing scrap. With all
the uncertainties, we have to depend on the local supply that
for sure is not enough. Since its too risky to import
scrap, some of us chose to import billet instead."
Ministry is reluctant to allow scrap containers into the
country because they are thought to be heavily contaminated
with liquid and mixed waste.
Some containers have already
been returned to their country of origin, including some 90
containers apparently sent back to Britain in May.
"Most of the scrap importers
have some containers that have been sitting in port since last
February or March. The total number of containers detained all
over Indonesia was around 10,000, but (they have been) slowly
released until there are only a couple of thousand now. Some of
them have already been re-exported. The rest of them will be
sitting there for an indefinite period of time," said the melt
shop source, whose operations are among those affected by the
"Basically, some of the melt
shops are running at half their capacity, while others are
using sponge iron to maintain normal operations," he added.
The Indonesian Iron and Steel
Industry Association (IISIA) has been working with different
government agencies to try to speed up the release of the
remaining containers. "IISIA is doing everything it can to talk
to the government, but so far there have been no positive
results," the source said.
The IISIA could not be reached
A version of this article was first published by AMM sister
publication Steel First.