US Steel Sector: Supply growth isn't just a rebar issue

We believe investors are mispricing the relative risk between flat rolled and long products. US HRC pricing has risen ~54% since October 2025, largely driven by supply factors: imports are down ~40% y/y and the Gary blast furnace re-line (~2.5mt capacity) further tightened domestic supply, while end-market demand is uninspiring (NUE forecasts ~2% steel demand growth in 2026, flat excluding ~1% contributions from data centers and southern border wall spending). While fall maintenance outages could support pricing through October, we expect domestic capacity restarts, new additions and import normalization to shift US flat rolled balances toward oversupply in 2027. Flat rolled steel faces materially greater import risk, driven by a larger gap vs historical import levels, an open import arbitrage window (implying as much as ~28% downside to spot HRC pricing) and greater USMCA carve-out exposure. By contrast, the rebar import arbitrage window is closed, with landed South Korean rebar ~$35/