Japan-based steel producer Osaka Steel has announced the suspension of business at its consolidated subsidiary PT Krakatau Osaka Steel (KOS), a joint venture with Indonesia’s state-owned steel producer PT Krakatau Steel (Persero) Tbk, marking its decision to withdraw from steel operations in Indonesia.
KOS began commercial production in 2017 and has since supplied small and medium-sized steel sections and rebar primarily to the Indonesian domestic market. While the subsidiary achieved profitability in 2021, Osaka Steel stated that KOS has recorded losses continuously since 2022.
Financial performance review and market conditions
According to Osaka Steel, the Indonesian government’s substantial cuts to infrastructure spending in early 2025 led to a sudden contraction in steel demand. This resulted in a sharp decline in KOS’s sales volumes and intensified competition, putting additional pressure on margins. Given the prevailing supply-demand imbalance in the Indonesian steel market, Osaka Steel concluded that maintaining stable earnings by continuing KOS’s operations would be difficult.
Decision to exit Indonesia
Osaka Steel noted that the sale of the Indonesian business, which had been considered alongside operational restructuring, did not materialize. As a result, the company has decided to withdraw entirely from its Indonesian steel business and suspend KOS’s operations. The company added that production will be stopped on April 30, 2026, followed by the halting of shipments on June 30, 2026.