ASIATODAY.ID, JAKARTA — Japan’s Osaka Steel Co., Ltd. has decided to withdraw from Indonesia and shut down its joint venture with state-owned steelmaker PT Krakatau Steel (Persero) Tbk., citing prolonged losses and weakening demand following cuts in government infrastructure spending.
The company will cease operations at PT Krakatau Osaka Steel (KOS), its Indonesian subsidiary, marking a full exit from the country after nearly a decade of operations.
KOS has been operating commercially since 2017, with Osaka Steel holding an 86% stake and Krakatau Steel owning the remaining 14%.
KOS produces small to medium-sized steel sections and reinforcing bars, primarily for the Indonesian market.
In an official statement released on Wednesday, Osaka Steel said the decision was driven by continuous losses since 2022, despite the company posting a profit in 2021.
The situation worsened after the Indonesian government significantly reduced infrastructure spending in early 2025, leading to a sharp decline in domestic steel demand.
“As a result, sales volumes fell substantially, margins were squeezed amid intensifying competition, and our free cash flow remained structurally negative,” said Junichi Tani, President and Chief Executive Officer of Osaka Steel.
“We therefore conducted a comprehensive review of the sustainability of KOS’s operations.”
Tani added that it had become increasingly difficult for the company to secure stable earnings by continuing the business in Indonesia.
Consequently, Osaka Steel decided to terminate KOS’s operations and exit the Indonesian market altogether.
Details regarding the withdrawal scheme and implementation timeline will be further discussed with joint venture partner Krakatau Steel.
Osaka Steel plans to halt production at KOS on April 30, 2026, while all business activities, including product shipments, are scheduled to fully end by June 30, 2026.
The move comes amid broader challenges facing Indonesia’s steel industry, as reduced public infrastructure budgets and heightened competition continue to pressure margins and investment appetite. (AT Network)
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