Indonesia is expected to import 3 million tonnes of steel billet this year, up from 1 million tonnes in 2011, after the local authorities tightened import procedures for scrap metal, restricting domestic supply, an industry group said on Friday.

About 70 pct of Indonesia's scrap consumption is imported, but new obstacles to such imports, raised after some shipments were found to have been mixed with hazardous waste materials, mean many iron and steel companies are switching to billet as a raw material for making steel products.

"The scrap supply from the international market has been declining significantly," Edward R. Pinem, executive director of the Indonesian iron and steel industry association (IISIA) told reporters. The new import regulations had led to 7,000 containers of imported scrap being held at several ports across Indonesia since the start of the year, said Pinem. He added that scrap imports this year were expected to total 3 million tonnes, down from 5 million tonnes last year.

The move had caused scrap prices to double to $800 per tonne since last year, said Panggah Susanto, director general of manufacturing industry at the industry ministry.

"The (regulations) have led to a shortage of raw materials at 132 iron/steel smelting companies," Susanto said, adding that the increase in demand had pushed billet prices to $700 per tonne this year from $600 last year.

Steel billet would likely be imported from China and countries in eastern Europe, he said. China, the world's biggest steel consumer and producer, made 881 million tonnes of steel products last year, of which nearly 49 million tonnes were exported.

Indonesian iron and steel smelters normally use three kinds of raw materials - pig iron, sponge iron and scrap, most of which are supplied from the international market, Susanto said.