Japanese steel manufacturer Osaka Steel Co., Ltd. has announced the closure of its Indonesian subsidiary, PT Krakatau Osaka Steel (KOS), citing prolonged financial losses and a sharp reduction in Indonesia’s infrastructure spending since the start of 2025.
PT Krakatau Osaka Steel is a joint venture between Osaka Steel and state-owned steel producer PT Krakatau Steel (Persero). The company began commercial operations in 2017, producing small- and medium-sized steel sections as well as reinforcing bars, with most output supplied to Indonesia’s domestic market.
Although the joint venture recorded a profit in 2021, Osaka Steel reported that KOS has suffered continuous losses since 2022. The persistent downturn prompted the company to conduct a comprehensive review of its business sustainability in Indonesia.
According to industry publication SteelOrbis on January 28, 2026 Osaka Steel identified the government’s significant infrastructure budget cuts in early 2025 as a key factor behind the decline in steel demand. Reduced public spending triggered a sudden contraction in the national steel market, directly affecting KOS’s sales volumes.
The slowdown also intensified competition within Indonesia’s steel sector, where excess supply has further pressured prices and profit margins. The ongoing imbalance between supply and demand, the company said, has made it increasingly difficult to maintain stable profitability if operations were to continue.
Osaka Steel had previously explored several alternatives, including operational restructuring and the potential sale of its Indonesian steel business. However, those options failed to materialize, leading management to decide on a full exit from the Indonesian market.
Production activities at PT Krakatau Osaka Steel are scheduled to cease on April 30, 2026 with all product shipments set to end by June 30, 2026.
AloJapan.com