The proposed measure is in response to the influx of cheap steel products flooding in from China. The Industry Ministry’s director general for metal, machinery, transportation equipment and electronic industries, Gusti Putu Suryawirawan, said: “To prevent our steel industry from bankruptcy due to cheap imported steel, there has to be a reference price, a fair price.”

Putu also commented on the disparity of market prices for steel, pointing out PT Krakatu Steel’s conundrum when it had to charge $380 per tonne despite production costs being nearly double that amount, further stating that the steel reference price would hopefully resolve these issues, as well as enforce any domestic quota steel companies need to fulfill.

The reaction to proposed measures have generally been positive, with some claiming that it would create a more equal playing ground between local and imported steel. Indonesian Iron and Steel Industry Association (IISIA) executive director Hidayat Triseputro however pointed out that the measures “needs a thorough review on what pricing mechanism will look like, as it will involve interests of both upstream and downstream industries.

China, for its part, is expected to lower crude steel output by 23 million tonnes in 2016, but even that, according to Putu will result in around “100 million” tonnes worth of excess steel output.