Optimistic about steel profit repair for the second half of the steel consumption should not be too pessimistic

Every AI news, Huatai Securities pointed out that the steel consumption performance from January to May 2023 is not weak, but the high supply still repress the profit repair space. Looking forward, we are optimistic about 2023H2 steel profit repair. There are two main reasons: 1) the level control policy of crude steel output is expected to intervene, and the supply side or effective control will help improve the profit distribution pattern of the industrial chain, “from strong raw materials and weak steel or to weak raw materials and strong steel”; 2) Steel consumption is not weak, on the one hand, direct exports increased year-on-year, on the other hand, the domestic steel consumption structure has changed, manufacturing and infrastructure to form a strong supplement to real estate, we think that the second half of the steel consumption should not be overly pessimistic. Therefore, we expect that if the crude steel output control policy is landed, it is expected to drive steel profit repair, and at the same time, under the low inventory level of the industrial chain, if the demand is gradually improving, it is expected to further open the steel profit repair space.

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