1、North America Equity Research07 August 2024J P M O R G A NClean Tech/Metals&MiningBill Peterson AC(1-415)315-Bennett Moore(1-212)622-Mahima Kakani(1-212)622-J.P.Morgan Securities LLCBenchmark HRC has found its footing following 12 weeks of consecutive price declines,yet we view a V-shaped recovery a

2、s unlikely at this point.We had expected a floor would be reached sometime in 3Q;moreover,its likely prices gradually trend higher in the months ahead on opportunistic re-stocking,fewer import arrivals and stabilizing scrap costs.However,we continue to expect limited upside in the back half of the y

3、ear as demand fatigue lingers amid rate/election uncertainty and inventories remain lean but sufficient given underlying demand trends.Comparing recent management commentary Q/Q,we noticed similar themes with outlook comments typically more downbeat beyond optimism around pricing bottoming and servi

4、ce center activity picking up near-term.Given the sectors cyclicality and growing concerns around a hard-landing scenario,we find investors as of recent searching for quality names within the sector and preferring N-rated NUE among companies under coverage.Post-earnings stock reads:Since HRC began r

5、etreating in early May through the midst of earnings,FY24 EBITDA/FCF revisions for our steel coverage(ex STLC who hasnt reported)have averaged-18%/-55%vs.stocks down 7%during the same period.Notably,UW-rated STLD has outperformed and N-rated X has re-rated higher despite outsized negative FCF revisi

6、ons for both.We attribute this to STLDs stubborn valuation and growing confidence in Xs FY25 standalone valuation support backed by various growth projects and a likely positive FCF inflection.Weve also found N-rated NUE as a consensus defensive play given its clean balance sheet,strong product dive