1. Kumgang Steel Q2 Earnings: Key Findings

Kumgang Steel recorded sales of KRW 47.8 billion in Q2 2025, but operating profit fell to zero, and the company swung to a net loss of KRW 4.3 billion. This “earnings shock” significantly missed market expectations, raising concerns among investors.

2. Reasons for the Decline: A Multifaceted Analysis

This underperformance is attributed to a combination of factors, including the overall downturn in the steel industry, high logistics costs, exchange rate volatility, and high interest rates. The sharp decline following a strong performance in Q4 2024 is particularly worrisome.

3. Market Environment and Outlook: Continued Uncertainty

  • Interest Rates: High interest rates in the US and Korea increase interest expense burdens and dampen investor sentiment.
  • Exchange Rates: Fluctuations in the KRW/USD and KRW/EUR exchange rates impact the steel industry’s cost burden and profitability.
  • Raw Materials and Logistics: Volatility in international oil prices and freight rates contributes to cost pressures.
  • Industry Trends: Challenges in the steel industry are expected to persist due to the global economic slowdown and geopolitical risks.

4. Investment Strategy: A Cautious Approach is Necessary

Kumgang Steel’s stock price is likely to face downward pressure in the short term. In the medium to long term, the key variable will be whether the company can turn its performance around. Investors should carefully monitor the company’s future business plans, cost reduction and profitability improvement measures, and changes in macroeconomic indicators before making investment decisions.