Jakarta, CNBC Indonesia - The domestic steel industry is under heavy\npressure due to increasingly complex geopolitical factors. From global\noversupply, an influx of cheap imported products, to sluggish domestic\ndemand, these combined elements are squeezing the performance of\nnational business players.<\/p>\n
Latest developments see PT Krakatau Osaka Steel (KOS) stopping\nproduction at the end of April 2026, with full closure of operations\nscheduled for June 2026.<\/p>\n
The Ministry of Industry has spoken out on the impacts, particularly\non workers. Ministry spokesperson Febri Hendri Antoni Arief stated that\nthe government understands the social and economic consequences of the\ndecision.<\/p>\n
\u201cWe are saddened by the situation faced by PT Krakatau Osaka Steel\nworkers. The government recognises that this decision carries\nsignificant social and economic impacts. Therefore, we urge the company\nto fulfil the rights of affected workers in accordance with applicable\nlaws and regulations,\u201d he said in his statement on Tuesday\n(5\/5\/2026).<\/p>\n
The decision to halt operations was actually set at the beginning of\nthe year. Company management, through a board meeting on 23 January\n2026, decided on this step after ongoing financial pressures. The\ncompany has also recorded losses since 2022, in line with deteriorating\nmarket conditions.<\/p>\n
A decline in domestic construction steel demand is one of the main\ntriggers. At the same time, cheaper imported products are increasingly\ndominating the market. Global producers, especially from China, are\nconsidered superior in terms of production scale and cost efficiency,\nallowing them to offer lower prices.<\/p>\n
This pressure puts local producers in a difficult position. They must\nmaintain product quality but face uneven price competition.<\/p>\n
\u201cThis situation places the national steel industry in a challenging\nposition. On one hand, domestic producers are committed to maintaining\nproduct quality, but on the other, they face price pressures from\nlower-cost imports. This is further exacerbated by weakening domestic\ndemand, particularly from the construction sector,\u201d Febri explained.<\/p>\n
Furthermore, the government views the problems faced by KOS as not\nsolely internal to the company. External factors are seen to play a\nmajor role in weakening industry competitiveness.<\/p>\n
\u201cBesides limited product diversification, declining demand and\npressure from cheap steel imports, global oversupply conditions also\naffect the company\u2019s competitiveness,\u201d he revealed.<\/p>\n
To mitigate this pressure, the government has issued several\npolicies, including import controls through bans and restrictions,\nmandatory Indonesian National Standards for certain steel products, and\nincentives such as fixed natural gas prices and exemptions from import\nduties on billet raw materials.<\/p>\n
However, reflecting on the KOS case, the Ministry of Industry\nassesses that these steps are not yet strong enough to support the\nindustry as a whole. The government plans a thorough evaluation to\nformulate more effective strategies.<\/p>\n
\u201cWe will conduct a comprehensive study to formulate more effective\nstrategies in maintaining the sustainability of the domestic steel\nindustry,\u201d he emphasised.<\/p>\n
At the global level, the steel industry is indeed facing structural\nissues in the form of oversupply and low-price trading practices. Many\ncountries respond with protectionist policies such as import tariffs and\ntrade remedy instruments, while others promote efficiency and\ninnovation.<\/p>\n
\u201cStrengthening the national steel industry requires support from all\nstakeholders, including the government, industry players, and society.\nMoreover, global geopolitical dynamics, production cost structures, and\ndomestic demand levels will greatly influence the effectiveness of\nimplemented policies,\u201d he concluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/krakatau-osaka-steel-to-close-ministry-of-industry-responds-1778197970", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }