Steel Sector – Underpinned by the uptrend of steel price
Posted: Aug 28, 2025
- We expect domestic steel prices to recover in 3Q25, supported by Chinese steel prices reaching the highest YTD due to production cuts. During 2025-26, we forecast construction steel prices to rise 6%/7% YoY, while HRC prices are expected to increase 3%/4% YoY.
- Raw material prices such as coal and iron ore are projected to decline 4%/5% YoY in 2025 amid abundant supply, which will support gross margin (GPM) of producers. For coated steel enterprises, the upward trend of HRC will help improve gross margins thanks to low-cost inventory. Accordingly, the steel sector’s earnings in 2025–26 could grow 47%/32% YoY.
- In terms of valuation, the P/B of enterprises would be valuated at higher levels during the growth cycle of steel prices, supported by a positive earnings growth outlook. We maintain an Outperform recommendation for HPG, HSG, and VGS.
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