CRC Credit Research Compendium
Menu
日本語English

Issuer Credit Research

PT Krakatau Posco Additional Discussion Report: Support Structure, Profitability and Trade Policy

PT Krakatau Posco Additional Discussion Report: Support Structure, Profitability and Trade Policy

1. Purpose and Treatment

This note is a supplementary report that organises the discussion on Krakatau Posco in light of the existing issuer_summary and the Q1 2026 results flash. The purpose is not to create a new comprehensive issuer summary, but to pull together into a single analytical reading the issues that can be difficult when reading the existing reports: the meaning of classifying the bonds as "not Indonesian state-owned steel company bonds"; Krakatau Steel's position in the support structure; why POSCO is treated as the controlling shareholder despite owning 50%; the business reasons for weak profitability; FX, interest-rate and market risks; and the extent to which Indonesia's steel protection policy may be effective.

This note does not treat the claims raised in the discussion as verified facts as they stand. It separates points confirmed in the existing reports and company disclosures, analytical interpretations derived from the discussion, and unverified items that require further confirmation. In particular, the Offering Circular for the 2024 bonds, the support agreement with POSCO, the shareholders' agreement with Krakatau Steel, differences in rights between Class A / Class B shares, and any support obligations on the part of the Indonesian government or Krakatau Steel remain items for further verification at this stage.

2. Discussion Takeaway

The central conclusion from the discussion is that Krakatau Posco should be analysed not as an "Indonesian government-related bond" or a "POSCO parent bond", but as the bond of an Indonesian integrated blast-furnace steel JV that depends on POSCO support. Because Krakatau Steel is a 50% shareholder and has an Indonesian state-owned character, the name and operating location alone may invite investors to read Krakatau Posco bonds as quasi-sovereign exposure. However, within the scope confirmed in the existing reports, no Indonesian government guarantee has been identified for Krakatau Posco's bonds. The first credit support that bond investors should focus on is not Krakatau Steel or the Indonesian government, but the support agreement with POSCO, the issuer's strategic importance within the POSCO group, and its funding relationships with Korean and international banks.

At the same time, Krakatau Steel's presence should not be ignored from a credit perspective. Krakatau Steel is positive as a local sponsor, as a point of contact with policy authorities, as part of the Cilegon steel cluster, as a domestic sales and procurement network, and as a source of alignment with Indonesia's import-substitution and industrial-development policies. However, Krakatau Steel itself is a company often discussed in the context of financial restructuring and government support, and it would not be conservative to view it as a strong financial sponsor directly supporting Krakatau Posco's bonds. The natural order of credit support is POSCO support, strategic importance within the POSCO group, bank syndicate and capital-market access, Krakatau Steel's role as a local sponsor, and indirect support from Indonesian industrial policy.

On the business side, the existing reports are correct in concluding that profitability is thin, but there is scope to state more clearly why it is thin. Krakatau Posco has revenue of around USD2bn, while operating profit was only USD12.1mn in the POSCO data pack for 2024 and around USD6mn in the company's performance materials, with only a partial recovery to around USD66-67mn in 2025. This indicates not merely a temporary operating disruption, but the difficulty of running an integrated blast-furnace facility with annual capacity of around 3mn tonnes amid Indonesian domestic demand, project demand, export profitability, import competition, raw-material and energy costs, and a heavy USD interest burden.

Indonesia's steel protection policy is a modest near-term improvement factor for Krakatau Posco. For HRC in particular, the extension of anti-dumping measures from January 2025 to January 2030 and the additional investigation and preliminary determination against China's Wuhan Iron & Steel / Wugang could support domestic selling prices and market share. However, given that Chinese HRC import share had risen even under the existing regime, that duty rates vary by country and company, and that out-of-scope products, specification changes, third-country routing, processed-product inflows, and Krakatau Posco's own dependence on export profitability remain, policy protection should be viewed as an auxiliary factor for margin improvement, not as a standalone structural cure for weak profitability.

3. Support Structure and the "Not an Indonesian SOE Bond" Point

The phrase in the existing summary that Krakatau Posco is "not an Indonesian state-owned steel company bond" is not about the company's nationality or operating location, but about whose support bondholders should rely on for principal and interest repayment. Krakatau Posco is located in Cilegon, Indonesia, was established as a JV with Krakatau Steel, and has policy significance as Indonesia's first integrated blast-furnace steel mill. For this reason, it can be mistaken for something close to an Indonesian government-related issuer such as PLN or Pertamina.

The reasons for that impression are clear. First, the company name includes Krakatau, and Krakatau Steel is a steel company with an Indonesian state-owned character. Second, the steel mill is aligned with industrial policy objectives such as strengthening Indonesia's domestic steel supply, import substitution, and support for downstream manufacturing. Third, the shareholder structure at end-2024 was POSCO 50% and Krakatau Steel 50%, meaning the Indonesian-side sponsor formally owns half. The overlap of these three factors makes it easy at first glance to associate the credit with an "Indonesian state-owned steel-related bond".

In credit analysis, however, policy importance must be separated from explicit support for bond principal and interest. Within the scope confirmed in the existing reports, no Indonesian government guarantee has been identified for Krakatau Posco's bonds. What is confirmed for the 2024 bonds is a support agreement between Krakatau Posco and POSCO, meaning the support channel leans towards POSCO, not the Indonesian government. Krakatau Steel's state-owned character is therefore a positive factor, but treating Krakatau Posco's bonds as quasi-sovereign bonds on that basis alone would overstate the support.

For Krakatau Steel itself, it is natural to view the probability of government support as meaningful. Given its policy importance in Indonesia's steel industry, its state-owned character, and the potential involvement of public capital or state-owned capital in a restructuring context, Krakatau Steel does not look like a company that would be treated purely on market principles. However, that is a credit issue for Krakatau Steel itself and is separate from direct support for Krakatau Posco's bonds. Even if Krakatau Steel is likely to be supported by the government, whether that support would flow to Krakatau Posco through capital injection or liquidity support, and further reach USD bondholders' principal and interest payments, depends on contracts, political judgement, and Krakatau Steel's own financial capacity.

For this reason, Krakatau Steel should be positioned not as the main source of credit support, but as the local sponsor. It supports Krakatau Posco's business base through local customers, land and infrastructure, the Cilegon steel cluster, domestic sales channels, contacts with policy authorities, and credibility as a domestic industry player in requests for import restrictions and anti-dumping measures. As a financial sponsor, however, it should be ranked below POSCO on a conservative basis.

3.1 Why POSCO Can Be Treated as Controlling Despite 50:50 Ownership

The 2024 financial statements state that Krakatau Posco's shareholder structure is POSCO 50% and Krakatau Steel 50%, while also stating that POSCO is the direct controlling shareholder and POSCO Holdings is the ultimate parent. This is the point most likely to puzzle readers. The ordinary intuition is that 50:50 ownership implies joint control or an equal JV. However, accounting control is not determined solely by ownership percentage.

There are three possible explanations. First, there may be differences in the rights attached to Class A / Class B shares. It has been confirmed that Krakatau Steel holds Class A and Class B shares and POSCO holds Class A shares, so there may be differences in voting rights, board nomination rights, veto rights, rights to dividends and liquidation proceeds, and authority over key decisions. Second, under the shareholders' agreement or JV agreement, POSCO may have substantive decision-making authority over management, operations, technology, and financial policy. Third, POSCO may substantively lead the company through operating technology, raw-material procurement, financing, market access, and intra-group transactions.

This note does not, however, make a definitive statement on the reason. It is confirmed that the financial statements identify POSCO as the controlling shareholder, but explaining the basis rigorously would require reviewing the Articles of Association, Shareholders' Agreement, Offering Circular, and detailed related-party notes. In the report body, the safe formulation is: "Although ownership is 50:50, the financial statements treat POSCO as the controlling party. This may reflect differences in rights between Class A / Class B shares, the shareholders' agreement, board composition, and substantive involvement in management, operating and financial policies, but the details remain unverified."

3.2 Why the JV Exists Even Though Krakatau Steel Already Exists

The reason why Krakatau Posco was created as a JV despite the existence of Krakatau Steel is best understood as the overlap between Indonesian industrial policy and POSCO's overseas strategy. For Krakatau Steel, the incentives were to strengthen domestic steel supply capacity and bring in the technology, operating know-how and funding capacity of an integrated blast-furnace steel mill. For POSCO, the incentives were to obtain access to the Indonesian market, land and infrastructure, policy channels, a local sales base, and a steel production base in Southeast Asia. For the Indonesian government as well, the JV was aligned with policy goals such as import substitution, materials supply for manufacturing and infrastructure, and upgrading of the steel industry.

However, absent confirming materials, it would be inappropriate to state that the government explicitly ordered the JV to be created. A more accurate framing is to describe it as "a JV for which no explicit government instruction has been confirmed, but which is strongly aligned with Indonesia's policy direction of developing the steel industry, substituting imports, and strengthening domestic manufacturing."

4. Profitability: Why a Large Steel JV Does Not Earn Much

The current summary sufficiently demonstrates that Krakatau Posco is "not earning much". What readers are likely to want to understand, however, is why operating margins are thin despite revenue of around USD2bn, a modern integrated blast-furnace facility with annual capacity of around 3mn tonnes, and POSCO's operating know-how. This point is worth bringing more to the fore in the next summary update.

First, the company-specific numbers are quite severe. Based on the POSCO data pack, Krakatau Posco's operating profit was USD177.0mn in 2023, USD12.1mn in 2024, and USD67.0mn in 2025. The company's 2025 performance materials also present figures of around USD6mn in operating profit for 2024 and USD66mn for 2025. Although definitional differences remain, the conclusion is the same: profit almost disappeared in 2024, recovered only partially in 2025, and did not return to the 2023 level. In Q1 2026 as well, revenue was USD454.0mn, operating profit was USD12.8mn, net loss was USD17.4mn, and net finance costs were USD25.7mn, meaning that even as revenue recovered, operating profit was not sufficient to absorb interest costs.

This weak profitability cannot be explained simply by insufficient sales volume. Rather, it should be read as a business structure in which several factors overlap.

Profitability pressure Confirmed or discussion-based basis Credit interpretation
Volatile domestic demand Company materials cite lower steel prices, rupiah depreciation, and weak domestic demand as factors behind lower 2025 revenue Domestic sales alone cannot always sustain high-margin operations
Dependence on export profitability The 2025 and Q1 2026 materials discuss exports to Europe and exports aimed at profit opportunities Exports help maintain utilisation, but expose the company to international market conditions, logistics costs, and competitive pricing
Product mix The core products are HRC, Plate, and Slab. HRC and Slab are highly commodity-like, while Plate is also affected by project demand Even with sales volume, profits quickly thin when steel / raw-material spreads narrow
Fixed costs of integrated blast-furnace facilities For facilities with annual capacity of around 3mn tonnes, maintenance, raw-material inventory, and utilisation are important When demand is weak, lowering utilisation worsens fixed-cost absorption, while maintaining volume through exports does not necessarily leave much margin
Raw-material, energy, and operating costs The company discusses the use of low-cost coking coal, improved blast-furnace charge mix, lower power and gas consumption, and improved contract terms There is scope for cost reduction, but the need for such measures itself reflects a difficult earnings environment
Working-capital burden Q1 2026 saw operating cash outflow due to raw-material inventory build-up related to maintenance and delayed receivables collection during the Lebaran holidays Thin margins are compounded by thin liquidity, with cash of USD2.1mn and short-term borrowings of USD331.6mn
USD interest burden Finance cost payments were around USD131mn in 2024. In Q1 2026, net finance costs again exceeded operating profit Even if operations improve somewhat, the company can easily fall short of absorbing heavy debt and high interest rates

In integrated blast-furnace steelmaking, scale and operating efficiency are strengths in normal market conditions. However, when the market is weak, domestic demand is sluggish, and competition from imported steel is intense, the same scale appears as a burden in the form of fixed costs and working capital. For Krakatau Posco, domestic sales are the main battlefield, but the company does not yet appear to have enough pricing power to consistently secure high margins in the domestic market alone. When domestic demand is weak, the company needs to maintain utilisation and sales volume through exports, in which case earnings are pulled by broader steel market conditions across China, ASEAN, Korea, Japan, India and other regions.

The business-side conclusion for Krakatau Posco is therefore not that "large revenue makes it safe", but that "because the company has large-scale facilities, small changes in spreads, utilisation, sales region, product mix, raw-material procurement and working capital can have a large impact on credit metrics." In the next summary, it would be more conservative to say of 2025 that "operating earnings recovered somewhat from the extremely weak profitability of 2024, but did not return to the 2023 level and remain too thin to strongly support a low-investment-grade profile on a standalone basis", rather than simply stating that "operating earnings recovered."

5. Trade and Industrial Policy: A Stabiliser, Not a Structural Cure

Indonesia's trade and industrial policy is highly relevant to Krakatau Posco's operating environment. This is not merely a general point; it is explicitly stated in the company's own materials. In its investor materials, Krakatau Posco identifies creating barriers against imported steel products as one of its strategies, and explains the continued reduction of import licences, anti-dumping measures on HRC / Plate, and engagement with the government and anti-dumping committee. In other words, the company recognises competition from low-cost imported steel as a factor pressuring profitability and treats policy responses as part of its domestic market defence.

Recent policy direction is positive for Krakatau Posco. In the company's 2025 performance materials, the anti-dumping measures on HRC are stated to have been extended for five years from January 15, 2025 to January 14, 2030, with target countries including China, India, Russia, Taiwan and Thailand, and duty rates of 4.24-20%. This is supportive for domestic HRC prices and domestic sales share.

In addition, a further investigation into HRC produced by China's Wuhan Iron & Steel Group / WISCO began in 2025. KADI's official page states that, in the HRC anti-dumping investigation for which PT Krakatau Posco is the applicant, KADI conducted an on-site verification at Krakatau Posco from October 29 to 31, 2025. On a media-report basis, the investigation was reported to have begun in September 2025, and in January 2026 a recommendation was reported for provisional anti-dumping duties on HRC produced by Wugang / Wuhan Iron & Steel Group of 17.55% or USD95.02/tonne. If implemented, this would work in the direction of closing gaps in the existing framework.

However, the policy effect should be viewed only as a "modest to moderate improvement factor". An important point raised in the discussion was that, even though Indonesia already had anti-dumping measures on Chinese HRC, the reported share of Chinese HRC rose from 23.49% in 2023 to 31.58% in 2024. This indicates that even when a regime exists, gaps can remain through low-duty suppliers, zero-duty treatment, out-of-scope products, specification differences, third-country routing, processed-product inflows, and the operation of import licensing.

By product, HRC is where the effect should be greatest. In Krakatau Posco's 2025 performance materials, HRC production was 1,693 thousand tonnes and Plate production was 1,283 thousand tonnes. HRC is a core product, and AD measures on HRC imports are likely to affect prices and share directly. By contrast, Plate is more affected by investment cycles in government projects, infrastructure, energy, shipbuilding, and oil-and-gas-related demand, so the effect of the HRC AD extension cannot be read across as simply. Slab and semi-finished products are even more affected by international market conditions and export profitability.

Product View on policy effect Credit meaning
HRC High. The AD extension and WISCO / Wugang investigation apply directly Supportive for domestic prices and sales volume. However, rate differentials and circumvention risks remain
Plate Moderate. Government project demand is positive, but the AD effect is less clear than for HRC Demand cycles and continuity of higher-value-added projects are important
Slab / semi-finished products Limited to moderate. International market conditions and export profitability have a large effect Useful for maintaining utilisation, but does not guarantee high margins

For credit assessment, Indonesia's steel protection policy should be evaluated as a "stabilising factor for the domestic franchise", not as a "decisive factor that structurally restores profitability". The AD extension and WISCO / Wugang response are positive for domestic HRC prices, sales volumes and refinancing narratives in 2026-2027. However, they cannot prevent Chinese and ASEAN oversupply, low-duty suppliers, trade diversion, out-of-scope products, price competition in export markets, raw-material and energy costs, or USD finance costs. Policy protection is important, but improvement in standalone credit quality also requires better product mix, lower raw-material and operating costs, normalised working capital, and a refinancing plan for the 2027 bonds.

6. FX, Interest Rate and Market Risk

FX risk needs to be separated into accounting currency sensitivity and economic credit risk. Krakatau Posco's financial statements are presented in USD and its functional currency is USD, so USD-denominated debt itself does not appear as a large foreign-currency liability in accounting terms. However, when considering domestic sales in Indonesia, rupiah-denominated payments, the purchasing power of local customers, imported raw materials, export sales, and the source of repayment for USD debt, rupiah depreciation and FX volatility remain indirect credit risks.

An important point in the existing discussion is that even if the financial statements indicate limited net currency sensitivity, this alone does not mean that FX risk is small from a credit perspective. If domestic sales depend on the rupiah economy while raw materials, debt and interest burden are heavy in USD or USD-linked terms, rupiah depreciation can affect the credit through domestic demand, customers' payment capacity, imported raw-material costs, and financial-market risk premia. The report should therefore state that "although accounting net FX sensitivity is described as limited, from a credit perspective the mismatch between USD debt and Indonesian domestic demand / rupiah purchasing power should be viewed as an indirect risk."

For market risk, iron ore, coking coal, energy, logistics costs, steel selling prices, imported-steel prices and utilisation are all important. A blast-furnace producer's profit is determined by the spread after deducting raw-material, energy, logistics and fixed costs from selling prices. If steel prices fall while high raw-material inventory or coking-coal costs remain, operating profit can shrink quickly. Krakatau Posco's sharp profit decline in 2024 can be read as evidence of sensitivity to such spread deterioration and weaker demand.

For Indonesian rate hikes, direct and indirect effects need to be separated. If the main debt is USD-denominated and bank loans are SOFR-linked, the direct drivers of interest expense are USD interest rates, SOFR and refinancing spreads rather than the Indonesian policy rate. Indonesian rate hikes therefore do not immediately raise Krakatau Posco's coupons or SOFR-linked payments.

The indirect effects, however, cannot be ignored. Indonesian rate hikes can affect domestic construction and manufacturing investment, inventory financing, customers' funding conditions, the rupiah, country spreads, and domestic bank liquidity. If domestic demand weakens, Krakatau Posco will face a stronger need to maintain utilisation through exports, where it will be exposed to more severe price competition. Indonesian rate hikes are therefore more important through their indirect effects on domestic demand, customer credit, the rupiah and country risk than through their direct effect on interest expense.

For the floating-rate nature of the debt, bank loans and bonds need to be checked separately. The existing summary identifies several bank loans with SOFR plus margins ranging from 4.66% to the 7% range, and the short-term working-capital facilities clearly carry USD floating-rate risk. By contrast, the 2024 global bonds are described in the POSCO newsroom and existing reports as USD300mn three-year bonds and USD400mn five-year bonds, both with a 6.375% coupon, which would normally look like fixed-coupon bonds. However, if the financial-statement financial-risk notes contain language close to "variable-rate bank loans and bonds", the scope and classification should be checked against the Offering Circular.

The conservative wording at this stage is: "Bank loans are SOFR-linked and have high interest-rate sensitivity. The 2024 bonds appear, based on public disclosures, to carry a fixed coupon of 6.375%, but consistency with the interest-rate risk notes in the financial statements needs to be verified against the Offering Circular." For investment judgement, it is necessary to look not only at the fixed coupon on the 2027 bonds, but also the SOFR-linkage of short-term working-capital borrowings, market spreads at refinancing, and the strength of the POSCO support agreement.

7. How the Existing Summary Should Be Read or Tightened

The structure of the current summary is correct. In particular, the points that should be maintained are its treatment of Krakatau Posco not as an Indonesian government-related bond but as a strategic JV steel credit with POSCO support; its refusal to characterise the support agreement as a guarantee; and its emphasis on the 2027 bond refinancing, secured bank debt, low cash balance, and thin profitability.

However, the next update would read more clearly as credit analysis if the following five points were expanded.

First, 2025 should be described not simply as a "recovery", but as a "partial recovery from the weak profitability of 2024". Operating profit improved from 2024 but did not return to the 2023 level. To avoid readers taking the view that profitability has normalised, the report should state explicitly that earnings remain thin for strongly supporting a low-investment-grade profile.

Second, the relationship between 50:50 ownership and POSCO control should be explained in one additional sentence. The financial statements identify POSCO as the controlling shareholder, but the reason may lie in differences in rights between Class A / Class B shares, the shareholders' agreement, board composition, and substantive involvement in operating and financial policies, with the details still unverified. This would pre-empt likely reader questions.

Third, Krakatau Steel's position in the credit support structure should be made explicit. Krakatau Steel is positive as a state-owned-character entity, policy channel, local sponsor, and domestic industrial base, but it is not a direct guarantor of Krakatau Posco's bonds and is not a substitute for the POSCO support agreement. This distinction is important to avoid misreading the bonds as quasi-sovereign exposure.

Fourth, the explanation of weak profitability should be lifted from simple "market deterioration" to the combination of large-scale integrated blast-furnace facilities, domestic demand, export profitability, import competition, raw-material and energy costs, working capital, and USD interest burden. In particular, it would be useful to include the business picture that the company cannot necessarily run at high margins stably in the domestic market alone; when demand is weak, exports are needed to maintain utilisation, but exports are pulled by international market conditions.

Fifth, Indonesia's steel protection policy should be treated as a standalone issue as a stabilising factor for the domestic franchise. The HRC AD extension and WISCO / Wugang investigation are modest near-term improvement factors, but they do not prevent Chinese and ASEAN oversupply, low-duty suppliers, out-of-scope products, or competition in export markets. Policy is an auxiliary factor for margin improvement, not a decisive factor that structurally restores standalone profitability.

If this is reflected in the existing summary in the near term, the conclusion paragraph should move in the following direction.

Krakatau Posco is a JV with Krakatau Steel, which has an Indonesian state-owned character, and is an integrated blast-furnace steel mill aligned with the country's steel industrial policy. However, the core of bond credit support is not the Indonesian government, but the POSCO support agreement and the issuer's strategic importance within the POSCO group. On a standalone basis, the company is heavily exposed to the fixed costs of large-scale blast-furnace facilities, competition from imported steel, raw-material and energy prices, export profitability, and USD interest burden, and the 2025 profit improvement remains only a partial recovery from the weak profitability of 2024. Indonesia's protection policy, centred on HRC, supports domestic prices and sales volumes, but does not by itself resolve weak profitability.

8. Monitoring / Next Check

The most important items to check are the Offering Circular for the 2024 bonds and the support agreement. Unless it is confirmed whether POSCO's support is a direct guarantee, keepwell-type undertaking, liquidity support, capital support, whether the support obligation is unconditional and irrevocable, whether bondholders have direct claim rights, and how termination conditions, security limitations, additional debt restrictions, change of control, and cross default are structured, the distance from a POSCO parent bond cannot be measured accurately.

Next, it is necessary to confirm the basis on which POSCO is treated as the controlling shareholder despite owning 50%. Reviewing the differences in rights between Class A / Class B shares, the shareholders' agreement, board composition, management control, key decision rights, related-party transactions, and POSCO's involvement in operating and financial policies would allow a more precise assessment of the effectiveness of expected support.

On the business side, the highest priority is whether working capital reverses from Q2 2026 onwards. In Q1 2026, cash fell to USD2.1mn, short-term bank borrowings rose to USD331.6mn, and operating cash flow was an outflow of USD153.3mn. The company explains this as temporary, due to raw-material inventory build-up related to maintenance and delayed receivables collection during the Lebaran holidays, so it is necessary to monitor whether inventory, receivables, short-term borrowings and cash normalise from Q2 onwards.

For trade policy, the final decision in the WISCO / Wugang case, whether provisional AD duties are imposed, the duty rate, applicable HS codes, target companies, duration, and changes in import volume and import share should be checked. In particular, HRC domestic prices, Krakatau Posco's HRC sales volume, the domestic sales ratio, spillover to Plate, and the effect on export profitability should be separated. If the policy is effective, it should gradually appear in domestic sales volume, prices, operating margin and working capital from the second half of 2026 onwards.

On interest rates and FX, it is necessary to confirm the SOFR-linked balance of bank loans, fixed / floating terms on bonds, hedging policy, net position of rupiah-denominated assets and liabilities, FX pass-through into domestic selling prices, and imported raw-material costs. Rather than Indonesian interest rates themselves, the focus should be on USD rates, SOFR, refinancing spreads, rupiah depreciation, and the pass-through to domestic demand.

Finally, the refinancing path for the USD300mn 2027 bonds needs to be checked early. Relative value and credit headroom for Krakatau Posco's bonds will change significantly depending on whether the main path is bank refinancing, re-accessing the bond market, POSCO support, internal cash, secured facilities, or rolling short-term borrowings.

9. Unverified / Pending Items

The first important item that remains unverified from this discussion is the legal strength of the POSCO support agreement. The name "support agreement" alone is not enough to judge it as equivalent to a guarantee. The full Offering Circular needs to be reviewed to confirm POSCO's support obligations, bondholders' claim rights, termination conditions, governing law, and covenants.

Second is the basis for POSCO control. The financial-statement disclosure identifying POSCO as the controlling shareholder has been confirmed, but the reason why POSCO has control despite 50:50 ownership should be checked against primary materials on share classes, voting rights, the board, shareholders' agreement, and control over operating and financial policies.

Third is Krakatau Steel's support obligations and the potential pass-through of government support. The possibility of government or state-owned-capital support for Krakatau Steel itself is separate from direct credit support for Krakatau Posco's bonds. It is necessary to distinguish whether there is any government guarantee, shareholder support obligation, capital injection obligation, or liquidity support obligation.

Fourth is the audited 2025 financial statements and profit by product and region. At this stage, 2025 revenue, operating profit, product production and related items can be confirmed from company materials and POSCO data, but the full balance sheet, cash flow statement, interest payments, borrowing details, product-level margins, and domestic / export profitability remain limited.

Fifth is the effectiveness of Indonesia's steel policy. The HRC AD extension and the WISCO / Wugang investigation are positive factors, but the duty rates, target companies, import share, third-country routing, out-of-scope products, and actual pass-through to domestic prices require ongoing confirmation.

10. Reference Context

Context referenced within the existing project:

Main company and external sources: