The Steel Titan

While preparing to return to headquarters from the Kashmir Cyrups Branch, Arcion Blacksword's party unexpectedly meets Mizi, a Merman with a new request: the Merman Village is under threat from Imperial forces, and he asks the mercenaries to help defend his home. They set out at once, pushing through a pack of monsters along the way. Before they arrive, Merman Roddick catches up to tell them the Imperial Army has already taken the village chief to the Underwater City.

At the Blau Cavern, the mercenaries fight through Imperial forces and interrogate the survivors, but can't get a clear answer for why the Empire is here — until they learn that Karim, head of the Granada Trade Corps, is involved, and press on into the Sunken City after her.

Entering the Underwater City through an ancient device, the mercenaries fight their way deeper. A key buried in the ground shatters in the fighting, revealing a sword hidden inside it — planting it into the ground opens a new door. Further in, the party finds a mysterious stone stele; while Mizi tries to decipher it, Arcion places his hand on it and the ground trembles.

It becomes clear that Beradin is behind the incident. To stop the mercenaries, Paltamilla summons the Demon Corps to hold them off, then presses on into the Inner Water City alone. Back at the Chamber of Seals, the mercenaries are confronted by the Machina Arbalest — and realize the sword freed from the buried key is its ignition key. Arcion raises it, boards the machine, and immediately pursues the Imperial Army.

The mercenary company, now with Arbalest, clashes with the main Imperial force as it tries to seize a God of Destruction statue, then presses the advantage to pursue Paltamilla directly.

As the Demon Corps keeps pouring in, Arcion refuses to spend any more of his mercenaries' lives on it — he sends his companions away and stands alone against the Imperial Army. When persuasion proves useless, he destroys the pillar holding up the Underwater City rather than back down, forcing the Imperial Army to flee rather than be buried with him. Believing escape in the slow-moving Arbalest is impossible, he quietly waits for death — but the machine's waterproofing carries him back to his mercenaries after all.

Grateful, Village Chief Jethis entrusts Arcion with both the Arbalest and a sword recovered from the ruins, named Durendal, asking him to use them for a good cause. (Durendal's significance beyond a named companion blade isn't established in the source material gathered so far.)

This is the beginning of Kashmir's entanglement with Silver Arrow's cause. It's through this Merfolk connection that Arcion acquires the first-class Machina Arbalest — the "steel titan" of the chapter's title — cementing Kashmir as a military force worth courting for the campaigns ahead.