Osaka Steel to exit Indonesia, suspend Krakatau Osaka Steel operations
Wednesday, January 28 2026 - 07:43 AM WIB
By Romel S. Gurky
Japanese steelmaker Osaka Steel Co., Ltd. said it will suspend operations at its consolidated subsidiary PT Krakatau Osaka Steel (KOS) in Indonesia, citing persistent losses and weak steel demand following cuts to government infrastructure spending.
The decision was approved at a board meeting on January 23, the company said in a statement.
Osaka Steel established KOS in 2012 as a joint venture with Indonesian state-owned steel producer PT Krakatau Steel (Persero) Tbk. The company began commercial production in 2017, supplying small- and medium-section steel products and reinforcing bars mainly to the domestic Indonesian market.
Although KOS returned to profitability in 2021, it posted net losses from fiscal year 2022 onward. Osaka Steel said it had been monitoring the subsidiary’s structural free cash flow as a key indicator of business viability, but conditions deteriorated sharply in early 2025 after the Indonesian government significantly reduced infrastructure-related budgets.
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The spending cuts led to a steep decline in steel demand, lower sales volumes and margin pressure from intensified competition, resulting in persistently negative free cash flow. Osaka Steel said it concluded that securing stable profitability under the current supply-demand environment would be difficult. Efforts to sell the business did not materialize, prompting the company to decide to withdraw from Indonesia and suspend KOS’s operations.
Under the current plan, KOS will halt production on April 30, 2026, with business operations to be suspended following completion of shipments by June 30, 2026.
Osaka Steel holds an 86% stake in KOS, with Krakatau Steel owning the remaining 14%. The subsidiary has paid-in capital of US$100 million and is based in Cilegon, Banten.
The company said details regarding the method and timing of its withdrawal from Indonesia will be determined through discussions with Krakatau Steel and disclosed once finalized, in accordance with Japanese disclosure rules.
Osaka Steel added that it expects to record losses related to the withdrawal, though the timing and amount have yet to be determined.
Editing by Reiner Simanjuntak