Chosun Refractories' Strategic Positioning in the Korean Steel Supply Chain

Chosun Refractories (KRX: 462520) has emerged as a pivotal player in South Korea's steel supply chain, leveraging its long-standing partnership with POSCO and recent high-value contracts to solidify its growth trajectory. The company's strategic alignment with POSCO, coupled with its innovation in automation and materials science, positions it to capitalize on the expanding global refractories market, which is projected to grow at a compound annual rate of 9.1% through 2035Refractories Market | Global Market Analysis Report - 2035^[1].

Recent Contract Wins and Market Response

In late 2025, Chosun Refractories secured two supply contracts with POSCO, valued at KRW41.6 billion and KRW55.6 billion, respectivelyChosun Refractories Co.,Ltd. - Calendar^[2]. These agreements, part of a decades-old alliance dating back to 1974Chosun Refractories - 2025 Company Profile - Tracxn^[3], triggered a 21% surge in its share price, signaling investor confidence in the company's ability to translate contractual commitments into revenue. The contracts focus on supplying refractory materials and automation-related auxiliary devices for POSCO's steel mills, including robotic systems for continuous casting and ironmaking processesPOSCO DX to develop robots for steel mills^[4]. This collaboration aligns with POSCO's 2025 transformation strategy under Chairman Jang In-hwa, which prioritizes digitalization and supply chain resiliencePOSCO's Jang In-hwa outlines six core tasks for 2025 transformation^[5].

Financial Resilience and Sector Tailwinds

Chosun's financials reflect a mix of volatility and underlying strength. For the quarter ending June 30, 2025, the company reported positive earnings per share (EPS) of ₩7.45 and revenue of 214.325 billion KRW, though earlier quarters saw negative EPS, such as -₩41.00 in March 2025Chosun Refractories (000480) Earnings Report: Key Numbers^[6]. Retained earnings remain robust at ₩214.33 billion as of June 2025Chosun Refractories (000480) Earnings Report: Key Numbers^[6], providing a buffer against sector-specific risks. Historically, Chosun has demonstrated resilience: in FY 2024, domestic refractory manufacturing revenue surged 78.28% year-over-year to 481.78 billion KRW, while overseas revenue grew 113.85% to 27.18 billion KRWChosun Refractories (KRX:462520) Business Metrics & Revenue^[7].

The global refractories market, driven by iron and steel demand, is forecasted to expand from USD 49.5 billion in 2025 to USD 118.2 billion by 2035Refractories Market | Global Market Analysis Report - 2035^[1]. As a key supplier to POSCO—one of the world's largest steelmakers—Chosun is well-positioned to benefit from this growth, particularly as POSCO invests in automation and localization to counter global challenges like Chinese steel oversupply and U.S. tariffsPOSCO Holdings improves performance despite demand industry downturn^[8].

Strategic Innovation: Robotics and Blockchain

Beyond traditional supply contracts, Chosun's partnership with POSCO DX—a digital transformation subsidiary—highlights its forward-looking strategy. Together, they are developing robots to automate high-risk tasks such as nozzle replacement in continuous casting, reducing reliance on manual labor and enhancing safetyPOSCO DX to develop robots for steel mills^[4]. POSCO DX handles robot design and simulation, while Chosun specializes in refractory materials and auxiliary devicesNEWS - POSCO DX^[9]. This synergy not only strengthens their supply chain but also aligns with broader industry trends toward industrial automation.

Additionally, Chosun is exploring blockchain technology to streamline its supply chain, aiming to reduce payment delays and data discrepancies[2025] Chosun Refractories Co Blockchain Supply Chain^[10]. This innovation could further enhance operational efficiency, a critical advantage in a sector marked by tight margins and cyclical demand.

Risks and Uncertainties

Despite these positives, challenges persist. The lack of analyst coverage for Chosun's future performance introduces uncertainty, as does the broader steel industry's vulnerability to global economic shifts. For instance, POSCO has shuttered plants amid industry downturnsKorean steelmakers shut down plants amid industry downturn^[11], which could indirectly affect Chosun's demand. Moreover, while the KRW41.6 billion and KRW55.6 billion contracts are significant, their duration and specific terms remain undisclosedChosun Refractories Co.,Ltd. - Calendar^[2], limiting visibility into long-term revenue stability.

Conclusion: A Compelling Case for Growth

Chosun Refractories' strategic positioning—anchored by its partnership with POSCO, innovation in automation, and exposure to a high-growth sector—makes it an attractive candidate for short-to-medium-term investment. The recent contract wins, combined with the global refractories market's expansion, suggest a strong tailwind for revenue and earnings. However, investors should monitor the Q3 2025 earnings release on December 11, 2025Chosun Refractories Co.,Ltd. - Calendar^[2], for insights into how these contracts translate into financial performance. For now, Chosun's blend of traditional expertise and technological adaptation underscores its potential to thrive in an evolving industrial landscape.