中国钢铁：复苏缓慢

Metals & Mining Slow recovery +2025losses largelypersist into 1Q26, with limited signs of anearly earnings turnaround Analyst, China MaterialsThe Hongkong and Shanghai Banking Corporation Limitedhoward.h.b.lau@hsbc.com.hk+85229966625Harikrishna C S* Supplydisciplinewillgraduallynarrowthesurplus,supportinga slowmarginstabilisationbylate2026,withpushback risk AssociateBangalore Maintain Hold ratings across coverage;welowerearningsestimates and cut TPs to reflect a slower recoverypath not registered/qualified pursuant to FINRA regulations Earningsremain underpressure:In1Q26,earnings stayed under pressure acrossour steel coverage,extending the weak trend seen in 2025.Angang and CsCreported net losses while Maanshan delivered a marginal profit.We attributeMaanshan'srelativestrengthtobenefitingasasubsidiaryofBaowuSteelGroupwhichprovides operational support, efficiency improvements,costadvantages,andastronger product mix. Policy-led supply disciplinemay stabilise marginsby late2026,but enforcementslippage could push back the inflection: We see China's steel market likely toremain burdened byoversupplyand squeezed margins.Demand continues todecline,with continued property activity contraction and plateaued infrastructure spendingNew construction starts extended their multi-year downturn, falling c20% y-o-y in1Q26.YTD exports arealso down c10%y-0-y,attributable to new export licensingrequirements and the Hormuz blockade.We still expect exports to stay relativelyresilient over full-year 2026 amid weak domestic demand. While benchmark steelpriceshaverisenbycRMB2oo/toverthepasttwomonths,thishasbeendrivenbyhigher input costs rather than improved end-demand. The anti-involution campaignintroduced in July 2025 seeks to address this by curbing disorderly competition,tightening capacity replacement rules, and accelerating the removal of outdated ornon-compliant production. However, unlike the supply-side reform in 2016, we expecta slower and more market-driven reduction in effective capacity.For most of 2026, weexpect steel prices to remain soft given weak demand from both property andinfrastructure.The turning point is unlikely to come from stronger consumption.Instead, we believe meaningful support will only emerge when the governmentshould gradually narrow the supply surplus and lead to mild stabilisation in pricing andmargins. However, we also see a risk that this timeline could be pushed back, givenongoinggeopoliticaltensions andaweakermacroeconomicbackdrop. MaintainHold across coverage with lowerTPs:Reflecting weaker1Q26 resultsand constrictedprofit margins,wecut ourearnings estimatesforall names inourcoverage.We broadlyapplylower orunchanged target PB multiplesforthe coveragetoreflectweakeroperationalperformanceandslowerearningsrecovery.Wemaintain our Hold ratings across the names in the sector given the muted near tomedium-termdemand outlook andthe slow path toward structural rebalancing. Issuer of report: The Hongkong and ShanghaiBanking Corporation Limited Disclosures & Disclaimer This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it. ViewHSBC Global InvestmentResearch at:https://www.research.hsbc.com insurplusChina's crude steel output fell 4.6% y-0-y in 1Q26, extending the downtrend seen in 2025. The reduction in output has been driven largely by weaker demand, rather than a supply-siderebalancing. The absence of any meaningful margin recovery suggests the market remainsoversupplied.Property activity continues to be a key drag:new construction starts haveprolongedtheir multi-year decline into 2026, falling by c20% y-0-y in 1Q26. Prices:BenchmarkpricesupcRMB200/t inpasttwomonths,drivenbyhigherinput costsChinesesteelpriceshaverisenbycRMB2oo/toverthepasttwomonths,drivenbyhigherinputcosts rather than improvement in end-demand.Tensions in the Middle East have contributedtorising raw material prices, with both iron ore and coking coal moving higher over the year. Ironore is currently trading at cUSD110/t (vs a 2025 average of USD100/t),while Chinese cokingcoal is at cRMB1,600/t (vs a 2025 average of cRMB1,400/t).Despite the uplift in steel prices,spreads remain weak and profitability continues to be constrained by persistent oversupply andsoft downstream consumption. Exports: YTD shipments down -10% y-0-y,but likely to remain resilient in2026Steel exports recorded a fourth consecutive monthly decline in April 2026, with YTD exports down by c10% y-o-y.The decline reflects new export licensing requirements and disruptionslinked to the Strait of Hormuz. China has introduced an export licensing system for 2026 coveringroughly 300 steel product types, partly to ease trade tensions amid rising global protectionism.While the Middle East conflict and shipping challenges create near-term headwinds, we stllexpect exports to remain relatively resilient overfull-year 2026given weak domestic demand- industrialpolic