SZG has been well positioned to benefit from the recent sharp upturn in European sheet and plate markets, but with leading exposure to short term contracts the company now faces max mark-to-market downgrades as margins return to earth after an unprecedented Q1 rally. Meanwhile, FCF performance continues to disappoint, with industry-lagging EBITDA-to-FCF conversion as SZG faces unique working capital headwinds in 2022. SZG shares are undeniably inexpensive, but late in the pricing cycle we continue to see better risk/reward elsewhere. Steel price leverage reversing course, but higher-for-longer outlook prevails SZG was rightly viewed as a key winner during the recent surge in European steel prices with leading exposure to spot sales of sheet and plate. But with prices now falling back to earth at an accelerating rate as panic buying slows following the Russia/Ukraine supply shock and as demand expectations weaken, SZG perhaps has more to lose than contract-oriented peers. While plate margins are likely to stay higher-for-longer given the product''s uniquely elevated dependence on CIS inputs, and we are positive on energy industry capex, continued poor earnings performance in Mannesmann tubes may unfortunately largely mask the improving industry backdrop. FCF generation remains poor entering period of elevated decarbonisation investment Unique amongst peers, SZG''s balance sheet has deteriorated over recent years, and while FCF should finally turn positive in 2022 performance may be weak as decade high earnings are offset by investment in working capital ahead of a blast furnace re-line in 2023. SZG''s recent investments in carbon emissions credits and Aurubis have proven hugely successful, but willingness to monetise remains low. Plans to fully decarbonise and convert to green steel production by 2033 are impressive, but with capex budget yet to be finalised and Germany now lagging other countries confirming state support for green steel there...