Indonesia’s Industry Ministry said multiple pressures forced PT Krakatau Osaka Steel to halt production and plan a full shutdown, raising concerns over impacts on the domestic steel sector and workers.
Spokesperson Febri Hendri Antoni Arif said on Tuesday the ministry is closely monitoring the situation and assessing its impact on the industry and related stakeholders.
The company stopped production in late April 2026 and plans to cease all operations by June 2026 amid mounting operational pressures.
“We are concerned about the workers. The company must fulfill their rights in line with regulations,” Arif said.
The decision to halt production was taken at a board meeting on Jan. 23, 2026, after the firm reported losses since 2022 due to declining performance.
Weak domestic demand for construction steel and rising competition from lower-priced imports have been key factors behind the downturn.
Global producers, especially from China, benefit from large-scale production and cost efficiency, enabling them to offer more competitive prices in Indonesia and other markets.
“This puts the national steel industry in a difficult position, facing price pressure from imports alongside weakening demand, particularly in construction,” he said.
Arif said the company’s challenges stem from multiple factors, not solely internal issues.
“Limited product diversification, declining demand, cheap imports and global oversupply have all hurt competitiveness,” he added.
To support the sector, the ministry has introduced measures including import controls, mandatory national standards, special gas pricing and zero import duties for billet raw materials.
However, the ministry said further policy strengthening is needed to protect and develop the domestic steel industry.
“We will conduct a comprehensive review to formulate more effective strategies,” Arif said.
Globally, the steel sector faces oversupply and low-price competition, prompting many countries to adopt protective trade policies.
Some countries are also pursuing industrial reforms to boost efficiency, capacity and technological innovation.
Arif said the ministry aims to maintain industrial stability while strengthening the independence of Indonesia’s manufacturing sector.
Related news: Indonesia sees strong industry push for green steel transition
Related news: Finance Ministry targets 40 steel firms over Rp5 trillion VAT losses
Translator: Ahmad Muzdaffar, Resinta Sulistiyandari
Editor: Rahmad Nasution
Copyright © ANTARA 2026
