PT Krakatau Steel (Persero) has voiced significant concerns over the persistently low capacity utilization of Indonesia’s national steel industry, which currently averages below 60 percent. Akbar Djohan, President Director of PT Krakatau Steel, attributes this critical situation primarily to the inundation of the domestic market with cheap steel products originating from China.
During a recent Working Meeting with Commission VI of the House of Representatives (DPR RI) at the Senayan Parliament Complex in South Jakarta on Wednesday, February 4th, Akbar Djohan elaborated on the severe impact. He stated, “Indeed, the average utilization rate of our national steel factories is below 60 percent. This is largely influenced by the influx of inexpensive steel products from China. We have calculated the potential for Indonesia’s imports, based on its steel needs, to be equivalent to nearly 80 trillion rupiah per year.” This highlights the immense financial drain and the competitive pressure faced by local producers.
Djohan further emphasized that global uncertainty has exacerbated the competition within the national steel industry. He noted a critical shift in the nature of this competition, moving beyond mere rivalry between businesses or companies to become a direct contest between governments. Citing international precedents, Akbar highlighted how the US government, under Donald Trump, imposed reciprocal taxes not just at 19 percent, but specifically for steel, added an approximate 50 percent tariff on steel imports entering the USA. Similar protective measures have also been implemented in countries like Korea, India, and even Japan, underscoring a global trend toward government intervention in steel trade.
The domestic consequences of this intensified competition are already visible. Akbar pointed to a troubling trend of local steel factory closures, including the planned cessation of operations for Krakatau Steel’s joint venture, Krakatau Osaka Steel, scheduled for April. This follows an earlier closure around October of Ispatindo, a long product factory in Surabaya, East Java, owned by the global steel magnate Mittal Steel Group, signaling a broader struggle within the Indonesian steel sector.
This situation presents a stark irony, especially when considering the forthcoming launch of numerous national strategic projects under President Prabowo Subianto. Initiatives such as the development of three million homes, the Free Nutritious Meals (MBG) program, and the Red-White Village Cooperatives will demand massive quantities of steel, which, logically, should be supplied by the domestic industry. The current state of low utilization and factory closures thus creates a paradox where local capacity is underutilized while future demand is projected to soar.
Adding another layer of complexity, Akbar revealed that China is not merely exporting steel products to Indonesia but has also been relocating its factories to the country for the past 10 to 12 years, utilizing induction furnace technology. He expressed concern, stating, “These induction furnaces were also recently linked to the import of scrap contaminated with nuclear materials, which could have far-reaching impacts.” This raises significant environmental and health concerns alongside economic challenges.
In light of these multifaceted issues, Akbar Djohan called for a collaborative transformation involving all relevant ministries, industry players, and the legislative body. The primary objective is to overhaul import trade regulations to effectively protect and bolster the national steel industry. He proposed two key strategies: first, positioning Krakatau Steel as a one-stop service provider to fulfill the steel requirements of all national strategic projects; and second, accelerating the implementation of anti-dumping, countervailing duties, and safeguard measures to prevent unfair trade practices.
Despite the prevailing challenges, Akbar also shared encouraging news regarding Krakatau Steel’s recent performance. Over the past year, the company has demonstrated significant improvements, with revenue increasing by 0.4 percent compared to 2024, reaching a value of USD 955 million in 2025. Steel sales volume also saw substantial growth, rising by 29 percent from the previous year to approximately 945 thousand tons. Furthermore, the company’s equity expanded by an impressive 99.4 percent compared to 2024, valued at approximately USD 868 million, indicating a strong foundation for future growth and its potential to play a pivotal role in meeting Indonesia’s burgeoning steel demands.
Summary
Krakatau Steel (KS) expresses serious concern regarding the low