Bisnis.com, JAKARTA – In the midst of the war that continues to rage in Ukraine, the supply of steel to Europe has receded, thus raising prices on the Blue Continent.This is allegedly causing the domestic downstream steel industry to be depressed by the supply of raw materials due to the large flow of exports to Europe.In addition to the impact of the war, the steel supply chain is currently also being hit by the widespread lockdown in China.The Southeast Asia Institute of Iron and Steel (SEAISI) noted that regional factories in Indonesia and Vietnam have been exporting to markets at better prices.SEAISI reports that a factory in Indonesia sold slab for US$1,050 per tonne to Italy on March 11, 2022."Their [export] destination is Europe where they can get more than US$1,000 per tonne," said a trader in Jakarta in the SEAISI report, quoted on Saturday (16/4/2022).Meanwhile, a Vietnamese factory sold 30,000 tonnes of slab at US$1,010 per tonne to Europe in the third week of March 2022.PT Tata Metal Lestari acknowledges the slow supply of raw materials for the domestic steel industry.Deputy President Director of Tata Metal, Stephanus Koeswandi, during a conversation with Bisnis said that his party is currently under pressure from two sides, the supply of raw materials from the intermediate industry and the flow of imported finished goods with low standards and low prices."The position of producers of BjLAS [Aluminum Zinc Coated Steel] in the country is squeezed. On top of raw materials, it is difficult, and our consumers can get cheaper materials because they do not meet the standard," said Stephanus, recently.Stephanus said the reduced supply quantity from upstream had an impact on intermediate and downstream industry players.The lead time for order fulfillment currently takes two to three months, from just one month.During Ramadan and ahead of Lebaran, Stephanus said he was increasing the stock of raw materials to secure production needs for the coming months."Our supplier, Krakatau Steel, does not get sufficient quantity of raw slab material, plus the price has increased, it is even higher than last year. So it is disturbed, it must be disturbed," he explained.Imported raw materials only contribute 15 percent of Tata Metal's total needs.As much as 85 percent of it is met from domestic suppliers such as PT Krakatau Posco and PT Dexin Steel Indonesia.Meanwhile, the supply of raw materials from China is very limited.This is because China also allocates more of its raw material exports to Europe due to higher prices."Several manufacturers, such as Krakatau Posco and Dexin, have a better chance in Europe because Europe needs this slab. In the end, this material went abroad," said Stephanus.Another downstream steel industry player, PT Steel Pipe Industry of Indonesia Tbk.(ISSP) or Spindo diversify raw material suppliers in the midst of world geopolitical turmoil and price spikes.Spindo Chief Strategy Officer Johanes Edward said the company did import some of its raw materials from China.However, it is confirmed that currently supply is in safe condition because it does not only rely on China"Our suppliers are not only from China, but also from Korea, Japan and of course local," said Johanes.Throughout last year, Spindo purchased 346,064 tons of raw materials, of which 43.6 percent or 149,418 tons were imported.Meanwhile, 56.4 percent or 196,646 were supplied by domestic producers.In addition to the risk of supply chain bottlenecks, the steel industry is also facing high price increases due to the Russo-Ukrainian conflict.However, Johanes admitted that the impact on the company can still be anticipated until now.On the other hand, PT Krakatau Steel (Persero) Tbk.(KRAS) claims that the supply of raw materials for the domestic steel industry is still sufficient, amid the risk of supply bottlenecks due to the widespread lockdown in China and the protracted Russia-Ukraine conflict.Commercial Director of Krakatau Steel Melati Sarnita said that her party did not import raw materials in the form of flat products from China.The raw materials for flat products, namely steel slabs, are mostly supplied by local producers, PT Krakatau Posco and PT Dexin Steel Indonesia."It's safe. Local players can supply it, 60 percent of our slab is supplied domestically from Krakatau Posco and Dexin Morowali," said Melati.The remaining 40 percent of raw material needs are imported.Unfortunately, Melati is reluctant to reveal the source of the imported raw materials.Melati, who is also the Chair of the Indonesian Iron and Steel Industry Association (IISIA) Flat Product Cluster, said that the composition of the domestic supply of steel raw materials is more or less at this figure."In my opinion, national steel is the same, for flat products. Usually the portion is 30 percent to 40 percent [for imports]," he continued.However, amid the economic recovery in the country as well as the incessant development of government infrastructure, the supply of steel raw materials for domestic industries needs to be a concern.Increasing export opportunities in the midst of geopolitical turmoil is indeed tempting, but what does it mean if the supply chain in the country itself is neglected?Check out other news about the topic of this article, here:Join and get analysis of economic and business information via your email.