Chosun Refractories

Chosun Refractories, founded in 1947, has long manufactured refractory materials essential to high-temperature processes in steelmaking, glassmaking and cement production.

Its core customers are POSCO's Pohang and Gwangyang steelworks, supplying refractories across the blast furnace, steelmaking/chemical, ironmaking/construction and plate-rolling processes.

Based on past disclosures, shaped refractories used in furnace construction accounted for 26.6% of sales and unshaped (monolithic) refractories for 54%, with the refractory segment overall making up 82.8% of consolidated revenue.

The company has built an integrated service system spanning design, manufacturing, installation and process improvement, positioning itself as a partner that supports customers' operating efficiency and equipment lifespan rather than simply a materials supplier.

Since 2011 it has operated a waste-refractory collection and reprocessing system in cooperation with POSCO, achieving a recycling rate above 25% that supports both cost competitiveness and ESG objectives.

It also exports customized refractories to Brazil, Turkey, Indonesia and India, an effort to reduce reliance on a single domestic customer. The company converted to a holding-company structure via a spin-off in July 2023, emerging as CR Holdings and Chosun Refractories, and was relisted on the KOSPI that same month.

The domestic refractory market is an oligopoly centered on Chosun Refractories, POSCO Future M and Hankuk Refractories, a capital- and technology-intensive industry in which strict quality verification by customers makes new entry difficult.

FY2025 consolidated revenue rose 6.3% year on year to about KRW 532.0 billion from KRW 500.6 billion in 2024, and operating profit grew 19.2% to about KRW 23.9 billion, lifting the operating margin from 4.0% to 4.5%.

Owners' net income, however, was only about KRW 2.2 billion, a sharp decline from KRW 5.8 billion in 2024 and KRW 23.6 billion in 2023.

In 2023 the company posted revenue of about KRW 279.4 billion, operating profit of about KRW 31.9 billion and an operating margin of 11.4%, the strongest profitability of the past three years, before margins compressed for two consecutive years and then edged up again in 2025.

Quarterly results show pronounced swings: Q3 2025 posted the highest quarterly revenue and operating profit in the window, about KRW 135.5 billion and KRW 10.2 billion respectively, yet still recorded a net loss attributable to owners of about KRW 1.3 billion.

Q4 2025 revenue and profit both narrowed to about KRW 129.4 billion, KRW 2.3 billion operating profit and KRW 1.0 billion net income, before Q1 2026 improved markedly to about KRW 131.9 billion in revenue, KRW 9.0 billion operating profit and KRW 7.3 billion net income.

Q2 2026 revenue fell back to about KRW 126.2 billion with operating profit of only about KRW 1.0 billion, and the company again recorded a net loss attributable to owners of about KRW 4.8 billion, reproducing the gap between operating profit and bottom-line results.

This pattern suggests that volatility in non-operating items likely tied to equity-method or financial gains and losses is exerting significant influence on quarterly results.

On the balance sheet, the debt ratio rose from 98.4% in 2023 to 138.4% in 2024 before easing to 116.3% in 2025, while operating cash flow jumped to about KRW 52.7 billion in 2024 before contracting back to about KRW 4.0 billion in 2025, indicating year-to-year variability in cash generation as well.

Aggregate owners' net income across the trailing four quarters (Q3 2025 through Q2 2026) was about KRW 2.2 billion, showing that quarterly volatility carries through into the rolling annual figure.

Chosun Refractories' results are closely tied to the capital spending and production strategy of its core customer, POSCO.

In June 2026, POSCO completed a roughly 2.5-million-ton-per-year electric arc furnace at its Gwangyang works at a cost of about KRW 600 billion, aiming to cut carbon emissions by about 75% versus blast furnace operations while using a hybrid-melt technique combining electric-furnace and blast-furnace molten iron to produce higher-grade steel.

The next step is commercializing HyREX, POSCO's hydrogen-based ironmaking technology; the company plans a 300,000-ton-per-year demonstration plant at its Pohang works targeting completion in 2027 with total investment of about KRW 1.53 trillion.

The global steel industry is seen as shifting from a blast-furnace-centric model toward selective process conversion as carbon border regulations tighten and demand growth slows. Layered on top of this, low-priced Chinese steel exports are intensifying structural price competition both domestically and globally.

The refractory industry itself remains a capital-intensive business requiring strict quality verification to ensure stable steelmaking operations, an oligopoly structure with high entry barriers that is likely to keep Chosun Refractories, POSCO Future M and Hankuk Refractories as the three dominant players for the foreseeable future.

Even so, electric-arc and hydrogen-reduction processes involve different equipment configurations than traditional blast furnaces, meaning the types and volumes of refractories required could shift over the medium to long term, a variable the industry as a whole is monitoring.

In September 2025, Chosun Refractories disclosed a one-year supply contract with POSCO worth about KRW 74.67 billion, covering 48 core trough- and runner-management refractory items for the period from October 1, 2025 through September 30, 2026, equal to 14.91% of the prior fiscal year's (2024) revenue.

The company disclosed three POSCO supply contracts totaling about KRW 140.3 billion between January and September 24 of the same year, reflecting its pattern of building its revenue base through periodic contract renewals.

Because that contract's term ended on September 30, 2026, just before this report's reference date, whether a renewal contract is disclosed is a near-term item to watch.

On the environmental side, the company has maintained a waste-refractory recycling rate above 25% and has stated plans to pursue further cost reduction and competitiveness through AI-based automation.

CEO Choi Kwang-cheol has articulated a management policy of strengthening substance over top-line growth to become what he called a small but strong company.

With POSCO's Gwangyang electric arc furnace now operating and the HyREX demonstration plant progressing toward a 2027 completion target, adapting refractory technology to these new processes is emerging as a medium-term challenge for Chosun Refractories.

On the export side, the company continues to expand overseas customer relationships in Brazil, Turkey, Indonesia and India in an effort to ease its dependence on a single domestic customer.