1. Daehan Petrochemical’s Q2 Performance: What Happened?

Daehan Petrochemical reported sales of KRW 846.8 billion, an operating loss of KRW 4.6 billion, and net income of KRW 1.4 billion for Q2 2025. Sales significantly exceeded market expectations, and the operating loss narrowed compared to the previous quarter. However, the decline in net income presents a contrasting picture.

2. Analyzing the Drivers: Why These Results?

  • Stabilizing Raw Material Prices: Lower or stable crude oil and naphtha prices compared to Q1 likely contributed to improved profitability.
  • Signs of Demand Recovery: Easing global recessionary pressures and seasonal factors may have driven increased demand for petrochemical products.
  • Favorable Exchange Rate: Fluctuations in the KRW/USD exchange rate could have positively impacted export competitiveness.

However, the decrease in net income requires further investigation. Factors such as increased interest expenses, one-time costs, or lower after-tax profits could be at play.

3. Investment Strategy: What Should Investors Do?

While the improvement in Q2 performance is positive, the possibility of a short-term recovery cannot be ruled out. Investors should carefully consider the following risk factors before making any decisions:

  • Geopolitical Risks: The ongoing US-China trade tensions and the Russia-Ukraine war create uncertainty, potentially impacting raw material price volatility.
  • Global Recessionary Risks: The sustainability of the economic recovery remains uncertain, with potential demand decline in case of a recession.
  • Raw Material Price Volatility: Sharp increases in crude oil prices could negatively impact profitability.
  • Intensifying Competition: Increased production capacity from competitors like China may exacerbate competition.

4. Action Plan for Investors

Avoid focusing solely on short-term performance improvements. Instead, adopt a long-term perspective, continuously monitoring the company’s fundamentals and external environment. Consult additional financial information and market analysis to make informed investment decisions.