钢铁行业：等待需求拐点Steel Waiting for a demand inflection

Summary of the Conference Call on Steel Industry - July 2025 Industry Overview - The steel industry is currently experiencing a lackluster demand environment in Europe, despite some supportive trade measures and potential increases in defense and infrastructure spending [9][10] - The demand for carbon steel is expected to remain weak, with no clear signs of recovery anticipated in 2025 [9][10] - Stainless steel demand is also expected to lag behind carbon steel due to its later-cycle nature, with no inflection predicted for 2025 [9][10] Key Insights - Demand Conditions: Demand conditions in Europe are weak, leading to a continued erosion of EU Hot-Rolled Coil (HRC) spreads, which have fallen below historical averages [9][10] - Equity Ratings: Steel equities have seen a sharp re-rating, with shares outpacing fundamentals, particularly for companies like thyssenkrupp and Salzgitter, which diminishes their risk-reward appeal [9][10] - Preferred Companies: - Carbon Steel: voestalpine is favored due to its resilient EBITDA/t and manageable decarbonization investments [10] - Stainless Steel: Acerinox is preferred for its strong earnings profile supported by US exposure and high-margin alloys business [11] Financial Performance - The steel sector is trading at approximately a 34% discount to its historical average on EV/normalized EBITDA, but consensus earnings downgrades for 2025 are anticipated [9][10] - Companies like thyssenkrupp have seen their shares double year-to-date, but the valuation appears stretched with a 20-30% premium to their sum-of-the-parts (SotP) valuation [10] Market Dynamics - Construction and Automotive Demand: These sectors are identified as key demand drivers for steel, but current indicators suggest a slowdown in growth [21][22] - Global Steel Production: The center of gravity for global steel production is shifting towards Asia, with significant production expected from China [19][27] Trade and Inventory Insights - EU steel imports are heavily influenced by countries like Turkey, South Korea, and China, with specific quotas set for various products [81][87] - Steel inventories across the value chain are being monitored, with US steel inventory indexed to January 2019 showing fluctuations [71] Economic Indicators - The construction confidence indicator in the EU has shown a decline, reflecting lower confidence in the sector [38] - In China, cement production growth has been negative, indicating potential challenges in construction-related steel demand [43] Conclusion - The steel industry is currently in a phase of waiting for a demand inflection, with key indicators suggesting continued weakness in both carbon and stainless steel markets. The focus remains on managing costs and navigating the challenging demand landscape while identifying potential investment opportunities in resilient companies like voestalpine and Acerinox [9][10][11]