April 27, 2026 | 05:57 pm
TEMPO.CO, Jakarta - Indonesian steel company PT Krakatau Steel (Persero) Tbk. faces serious challenges in maintaining the supply of raw materials amid conflicts in the Middle East, according to its President Director, Akbar Djohan. Currently, approximately 300,000 tons of imported materials are delayed in the Strait of Hormuz.
He pointed out that the dependency on imported raw materials remains a primary obstacle, potentially disrupting the company's production targets and operational performance.
"To be frank, our raw materials are still imported, and there are around 300,000 tons that are still problematic in the Strait of Hormuz," Djohan said at the Krakatau Steel office in Jakarta on Monday, April 27, 2026.
Djohan believes that the steel industry is inextricably linked to global dynamics, including geopolitical factors, trade policies, and logistical disruptions. These factors exert layered pressure on the domestic steel industry.
The company's operational goal is to produce around 1.2 million tons per year for the domestic market. When the installed capacity is maximized, the production can reach up to 3 million tons per year.
However, Djohan stated that the weakening of the rupiah puts pressure on production costs, especially when it comes to purchasing imported raw materials.
Additionally, the increase in logistics and insurance costs adds to the operational burden. Djohan explained that global geopolitical conditions have triggered a rise in raw material prices, ultimately leading to adjustments in steel product prices.
He emphasized that Krakatau Steel is being cautious about raising prices to avoid losing its competitive edge in the domestic market. "This price increase is beyond our control as it is influenced by geopolitical factors. But we also cannot arbitrarily raise prices because there is competition with cheaper imported steel, especially from China," he said.
Amidst these conditions, Krakatau Steel continues to target solid financial performance. The company is aiming for revenue of Rp20 trillion through a combination of the domestic and export markets. From this target, the company is aiming for a minimum net profit margin of 10 percent in 2026.
In 2025, PT Krakatau recorded a net profit of Rp5.68 trillion, with revenues reaching $959.84 million, equivalent to around Rp16.05 trillion.
Operationally, the sales volume of steel products reached 944,562 tons, a 29 percent increase compared to the previous year. Krakatau Steel's total assets are recorded at US$2.77 billion, equivalent to Rp46.24 trillion.
Efforts to settle debt obligations have led to a 17.04 percent reduction in the company's liabilities to US$2.04 billion or around Rp34.11 trillion. The improvement of the company's financial structure has led to a significant increase in its equity. In 2025, Krakatau Steel's equity value more than doubled to US$725.51 million, or around Rp12.13 trillion.
Read: Iran Exempts Russia from Strait of Hormuz Transit Fees
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