Goldman Sachs: The pace of China's steel production capacity reduction is slower than expected, and steel stocks face long-term profit stagnation

Goldman Sachs stated that due to the slower-than-expected progress in capacity reduction in China's steel industry, coupled with high levels of steel exports from China, the improvement in prices is expected to be more moderate, and domestic steel mills will face a longer period of profit stagnation.

Goldman Sachs has lowered the earnings forecasts for Baosteel (600019.SH) and MAS C.L. (00323.HK) for the next two years and expects the losses for ANSTEEL (00347.HK) to widen. At the same time, the bank has also reduced its gross profit forecasts for rebar and hot-rolled coils.

The report mentioned that the current "anti-involution" efforts in the steel industry are facing short-term challenges, mainly related to whether companies can meet ultra-low emission standards and the reclassification of companies that meet the standards. However, Goldman Sachs still believes that the long-term goal of reducing capacity remains unchanged