Korea Steel

Korea Special Steel is an electric-arc-furnace steelmaker that produces billets from scrap steel and rolls them into section steel and bar steel products. Its output serves as base material for the construction, shipbuilding, automotive and machinery industries.

As of 3Q25 on a standalone basis, section steel accounted for about 27.79% of sales and bar steel (including rebar) for about 69.40%, making bar steel the larger segment.

Key customers include GS Construction, Lotte Construction, Hyundai Engineering & Construction, Daebang Construction and Heungsung Steel, with sales concentrated among construction firms and distributors.

Notably, BSM, a rebar-processing company wholly owned by GS Construction, is located near the company's rebar plant, giving it a favorable position for direct sales, and the share of GS Construction-related revenue is reported to be increasing.

The company operates three production sites—Chilseo, Sasang and Noksan—and expanded capacity from the third quarter of 2022 with a new rolling mill using updated equipment. Its strategy centers on small-batch, multi-product specialization combined with new-product development based on modern facilities.

Competitors include larger integrated players such as Hyundai Steel and Dongkuk Steel, against which the company operates a comparatively smaller, more specialized production system.

Annual results show operating margin improving from 3.8% in 2022 (revenue KRW 795.9bn, operating profit KRW 30.6bn) to 5.7% in 2023 (revenue KRW 830.4bn, operating profit KRW 47.3bn), before revenue fell to KRW 768.8bn in 2024 with margin dropping to 1.4% and net profit swinging to a loss of KRW 2.92bn.

In 2025, revenue held roughly steady at KRW 767.1bn while operating profit rose slightly to KRW 11.7bn (1.5% margin) and net profit turned positive at KRW 2.99bn. This is viewed as a relatively resilient outcome given that many electric-arc-furnace steelmakers posted losses during the period.

On a quarterly basis, 2Q25 showed a strong run with revenue of KRW 214.2bn, operating profit of KRW 9.81bn and net profit of KRW 6.09bn, but operating profit slumped to KRW 0.39bn in 3Q25, and 4Q25 recorded an operating loss of KRW 0.72bn and a net loss of KRW 1.46bn, reflecting the downturn in the industry.

In 1Q26, despite revenue rising to KRW 210.1bn, the company posted an operating loss of KRW 3.61bn and a net loss of KRW 2.75bn as cost pressure intensified. Revenue jumped to KRW 255.2bn in 2Q26, and the company returned to a small operating profit of KRW 0.47bn and net profit of KRW 0.14bn.

Over the trailing four quarters (3Q25–2Q26), cumulative owner net profit was a loss of about KRW 4.01bn, indicating the annual profitability recovery has not yet been fully replicated at the recent quarterly level.

This volatility appears closely tied to shifting spreads among scrap-steel input costs, foreign exchange rates and product selling prices.

Domestic steel consumption in Korea has continued to decline even after falling below the 50-million-ton threshold in 2024, with the industry estimating 2026 annual domestic demand at around 45.1 million tons.

Construction-related steel products such as rebar and pipe are expected to see a delayed recovery given the slow rebound in construction activity.

Against this backdrop, the government announced a steel industry upgrade plan in November 2025, and the National Assembly passed a special act on steel industry competitiveness and carbon-neutral transition (the 'K-Steel Act') on November 27 of that year.

As a result, larger players such as Hyundai Steel have moved to preemptively cut capacity, closing a 750,000-ton rebar production line at its Incheon plant.

However, government-procurement rebar orders switched to a competitive bidding system starting in the second half of 2025, reducing guaranteed demand and intensifying competition.

China-driven low-cost oversupply, rising trade protectionism, and currency volatility remain persistent cost and pricing pressures across the industry.

Within this environment, Korea Special Steel was cited as the only rebar producer to grow sales in the first half of 2025, though this was accompanied by an expansion in direct sales and a rise in accounts receivable.

As many EAF producers pursue capacity cuts and restructuring, the company's relative position is likely to hinge on cost management and its product-specialization strategy.

The company has stated it aims to strengthen competitiveness through inventory management for stable raw-material sourcing, new-product development based on modern facilities, and a small-batch, multi-product specialization strategy.

In 1Q26, despite standalone revenue rising 12.8% year over year, the company posted an operating loss, which it attributed to slowing global steel demand, higher raw-material costs from a weak currency, and China-driven oversupply.

Industry-wide, forecasts suggest that semiconductor plant investment and third-new-town development could generate some additional rebar and section-steel demand, though the volumes involved are not large, raising the possibility of intensified order competition among producers.

Steel was excluded from Korea's 2026 tax reform's domestic-production tax-credit list, but the Minister of Trade, Industry and Energy stated in August that he would coordinate with the finance ministry to include it—though this remains a coordination stance rather than confirmed policy.

If capacity-reduction roadmaps from larger players such as Hyundai Steel and Dongkuk Steel become concrete during 2026, this could affect industry-wide supply-demand normalization, making related developments worth monitoring.

As government-procurement rebar shifts further toward competitive bidding, how the company's expanding direct-sales channel (including GS Construction affiliate BSM) affects future order stability is also a point to watch.