Core Viewpoint - The Chinese steel industry is undergoing a transformation towards high-end, intelligent, and green development, driven by mergers and acquisitions that focus on resource integration and market expansion, as well as government policies encouraging industry consolidation [1][2][6]. Group 1: Industry Transformation - The steel industry is shifting from "physical accumulation" to "chemical integration," aiming for value creation rather than mere scale expansion [2][4]. - The Ministry of Industry and Information Technology has introduced the "Steel Industry Normative Conditions (2025 Edition)," which includes mergers and acquisitions as a key indicator for promoting efficiency and industry concentration [1][4]. - The integration of steel companies is expected to enhance operational efficiency and international competitiveness by eliminating redundant capacities and fostering collaboration across the industry [3][5]. Group 2: Case Studies of Successful Integration - China Baowu Steel Group exemplifies successful transformation through mergers, achieving a scale of "one billion tons" while transitioning from scale leadership to technological leadership [2][6]. - CITIC Special Steel has focused on niche markets, leading in seamless steel pipe production and bearing steel sales, demonstrating the effectiveness of targeted integration strategies [2][4]. - The merger between Ansteel Group and Benxi Steel Group resulted in significant cost reductions and efficiency improvements, showcasing the benefits of resource optimization [5][6]. Group 3: Global Expansion and Competitiveness - Chinese steel giants are actively pursuing global expansion to secure scarce resources, acquire advanced technologies, and enhance international branding [6][7]. - Hebei Iron and Steel Group's acquisition of a struggling Serbian steel plant illustrates the application of "chemical integration" principles abroad, leading to a turnaround in profitability [6][7]. - China Baowu's involvement in international projects, such as the Simandou iron ore project in Guinea, aims to establish a global value chain and enhance resource security [6][7]. Group 4: Technological and Environmental Advancements - The restructuring of steel companies has facilitated concentrated investment in R&D, enabling breakthroughs in advanced technologies and large-scale applications [4][5]. - The integration of digital and intelligent systems in production processes is enhancing operational efficiency and resource utilization [5][6]. - The industry's commitment to low-carbon transformation is exemplified by CITIC Special Steel's initiatives to reduce carbon emissions and energy consumption significantly [5][6].

Market Overview - On September 19, the special steel sector declined by 0.35%, with Xianglou New Materials leading the drop [1] - The Shanghai Composite Index closed at 3820.09, down 0.3%, while the Shenzhen Component Index closed at 13070.86, down 0.04% [1] Stock Performance - Key stocks in the special steel sector showed varied performance, with Jinzhou Pipeline up by 2.14% and Xianglou New Materials down by 3.47% [1][2] - The closing prices and changes for notable stocks include: - Jinzhou Pipeline: 7.15, +2.14% - Xianglou New Materials: 63.40, -3.47% - Xining Special Steel: 3.31, +0.61% - Taiyuan Iron & Steel: 3.93, 0.00% [1][2] Trading Volume and Capital Flow - The total trading volume for the special steel sector was significant, with Jinzhou Pipeline achieving a transaction amount of 1.28 billion yuan [1] - The net capital flow showed a net outflow of 403.62 million yuan from main funds, while retail investors had a net inflow of 2328.13 million yuan [2][3] Individual Stock Capital Flow - Notable capital flows for specific stocks include: - Xining Special Steel: Main funds net inflow of 18.89 million yuan, retail net outflow of 39.89 million yuan [3] - Jinzhou Pipeline: Main funds net inflow of 12.61 million yuan, retail net outflow of 6.93 million yuan [3] - Xianglou New Materials: Main funds net outflow of 1.91 million yuan, retail net inflow of 14.58 million yuan [3]

Market Performance - The special steel sector experienced a decline of 2.42% on September 18, with Shengde Xintai leading the drop [1] - The Shanghai Composite Index closed at 3831.66, down 1.15%, while the Shenzhen Component Index closed at 13075.66, down 1.06% [1] Individual Stock Performance - Shengde Xintai (300881) closed at 34.10, down 4.91% with a trading volume of 35,000 shares and a turnover of 122 million yuan [1] - Shagang Group (002075) closed at 5.86, down 3.93% with a trading volume of 849,300 shares and a turnover of 506 million yuan [1] - Fangda Special Steel (600507) closed at 5.32, down 2.92% with a trading volume of 270,500 shares [1] - CITIC Special Steel (000708) closed at 12.72, down 2.90% with a trading volume of 200,300 shares and a turnover of 257 million yuan [1] - Xianglou New Materials (301160) closed at 65.68, down 2.71% with a trading volume of 67,000 shares and a turnover of 452 million yuan [1] Capital Flow Analysis - The special steel sector saw a net outflow of 143 million yuan from main funds, while retail investors contributed a net inflow of 51.37 million yuan [1] - The table of capital flow indicates that Jiuli Special Materials (002318) had a main fund net inflow of 5.58 million yuan, while Shengde Xintai (300881) experienced a significant net outflow of 21.40 million yuan [2]

Investment Rating - The report maintains an "Accumulate" rating for the steel industry [5] Core Viewpoints - The ROA of the ordinary steel sector is at a low level since 2010, with a projected ROA of 0.93% for H1 2025 due to declining industry demand and profits [1] - The PB_LF of the ordinary steel sector is 0.96, which is 6.67% below the average since 2013, indicating potential for growth [1] - There are currently 12 ordinary steel companies with a PB_LF below 1, while 11 companies have a dividend yield above 3% [2][3] - The report anticipates an increase in dividend payout ratios for ordinary steel companies as low-emission transformation projects are completed by 2025 [3] Summary by Sections Section 1: Financial Metrics - The ordinary steel sector's ROA is projected to be 0.93% for H1 2025, marking a low since 2010 [1] - The current PB_LF of 0.96 is 6.67% below the average since 2013, with significant room for growth compared to peaks in 2017 and 2021 [1] Section 2: Company Analysis - Among the ordinary steel companies, 12 have a PB_LF below 1, with notable companies like Hebei Steel at 0.51, New Steel at 0.52, and Ansteel at 0.54 [2] - 11 companies in the steel sector have a dividend yield exceeding 3%, with the highest being Youfa Group at 6.09% [2][3] Section 3: Investment Recommendations - The report recommends focusing on Baosteel, Ordos, CITIC Special Steel, and Jiuli Special Materials for investment, while also suggesting to pay attention to Youfa Group, Nanjing Steel, and others [3]

Market Performance - On September 17, the special steel sector rose by 0.77% compared to the previous trading day, with Shagang Co., Ltd. leading the gains [1] - The Shanghai Composite Index closed at 3876.34, up 0.37%, while the Shenzhen Component Index closed at 13215.46, up 1.16% [1] Individual Stock Performance - Shagang Co., Ltd. (002075) closed at 6.10, with a gain of 3.92% and a trading volume of 1.11 million shares, amounting to a transaction value of 677 million yuan [1] - CITIC Special Steel (000708) closed at 13.10, up 1.63%, with a trading volume of 189,800 shares and a transaction value of 247 million yuan [1] - Fushun Special Steel (600399) closed at 5.42, up 0.37%, with a trading volume of 317,900 shares and a transaction value of 172 million yuan [1] - Other notable performances include Taiyuan Iron & Steel (000825) at 4.01 (up 0.25%) and Jiu Li Special Materials (002318) at 22.19 (up 0.09%) [1] Capital Flow Analysis - The special steel sector experienced a net outflow of 13.12 million yuan from main funds, while retail funds saw a net inflow of 28.99 million yuan [2] - The individual stock capital flow indicates that Shagang Co., Ltd. had a main fund net outflow of 42.04 million yuan, while retail funds saw a net inflow of 4.30 million yuan [3] - Taiyuan Iron & Steel had a main fund net inflow of 14.73 million yuan, while retail funds experienced a net outflow of 1.76 million yuan [3]

Core Viewpoint - The strategic cooperation agreement signed between CITIC Pacific Special Steel Group and the National Carbon Measurement Center (Fujian) aims to promote the green and high-quality development of the special steel industry while achieving national dual carbon goals [1] Group 1: Strategic Cooperation - CITIC Pacific Special Steel Group and the National Carbon Measurement Center (Fujian) have signed a strategic cooperation framework agreement [1] - The partnership will leverage each party's strengths to establish a national low-carbon high-end think tank [1] - The collaboration will involve policy pilot projects and the construction of a differentiated low-carbon evaluation system for special steel [1] Group 2: Industry Development - The agreement aims to support the construction of a national major platform for low-carbon special steel [1] - The initiative is focused on promoting the green and high-quality development of the special steel industry [1] - The efforts are aligned with the national dual carbon goals, emphasizing the importance of sustainability in the industry [1]

Market Overview - On September 15, the special steel sector declined by 1.51%, with Fangda Special Steel leading the drop [1] - The Shanghai Composite Index closed at 3860.5, down 0.26%, while the Shenzhen Component Index closed at 13005.77, up 0.63% [1] Stock Performance - Key stocks in the special steel sector showed varied performance, with notable declines in Fangda Special Steel, which fell by 5.50% to a closing price of 5.50 [2] - Other significant declines included Sha Steel Co., down 1.67% to 5.90, and Jiu Li Special Materials, down 1.18% to 22.61 [2] Trading Volume and Capital Flow - The special steel sector experienced a net outflow of 268 million yuan from main funds, while retail funds saw a net inflow of 85.74 million yuan [2] - The trading volume for Fangda Special Steel was 575,800 shares, with a transaction value of 320 million yuan [2] Individual Stock Capital Flow - Major stocks like Tai Steel and CITIC Special Steel saw significant net outflows from main funds, with Tai Steel experiencing a net outflow of 53.12 million yuan [3] - Conversely, retail investors showed a net inflow into stocks like Sha Steel, with a net inflow of 891.85 million yuan [3]

Core Viewpoint - The low-altitude economy in China is experiencing rapid growth, with the overall market size surpassing 500 billion yuan in 2023, and is projected to reach 1 trillion yuan in the near future, driven by market demand and supportive policies [1][11]. Summary by Sections Low-altitude Economy + Inspection Overview - The low-altitude economy + inspection refers to economic activities utilizing low-altitude aircraft such as drones and helicopters for various inspection tasks below 1,000 meters, with potential extensions up to 3,000 meters [3][4]. - This sector is characterized by the integration of advanced technologies like AI, blockchain, and VR/AR for real-time monitoring and data management [3]. Market Size and Growth - The market size for the low-altitude economy + inspection is estimated to be approximately 53.62 billion yuan in 2024, with expectations to grow to 120 billion yuan by 2025 [1][11]. - The overall low-altitude economy market is projected to reach about 670.25 billion yuan in 2024, with forecasts of 1.5 trillion yuan by 2025 and 3.5 trillion yuan by 2035 [4][5]. Policy Support - The Chinese government has introduced a series of policies to support the development of the low-altitude economy, including the inclusion of low-altitude economy in national planning and specific implementation plans for innovation in general aviation equipment [5][6]. - Key policies include financial support for critical technologies and products, aiming to enhance the industry's growth and technological capabilities [5]. Industry Chain - The low-altitude economy + inspection industry chain includes upstream hardware (materials, chips, engines), midstream manufacturing and services, and downstream applications in sectors like security, environmental protection, and energy [6][7]. - Chips are identified as a core component, essential for flight control, data processing, and communication in drones and eVTOLs [9]. Key Enterprises - Major companies in the low-altitude economy + inspection sector include DJI, Chengdu Zongheng Automation Technology Co., and several others specializing in industrial drones and related technologies [12][13]. - These companies are leveraging their technological expertise to provide innovative solutions across various applications, including public safety and environmental monitoring [12][13]. Development Trends - The industry is witnessing a trend towards increased technological integration and intelligence, with advancements in AI and machine vision enhancing operational capabilities [14]. - Application scenarios are diversifying, expanding from traditional inspections to areas like smart city management and emergency response [15]. - There is a significant enhancement in system integration and platform services, providing comprehensive solutions from data collection to intelligent analysis [16].

Investment Rating - The investment rating for the steel industry is "Positive" [2] Core Viewpoints - The steel sector has shown resilience with a 3.70% increase this week, outperforming the broader market [10] - The report highlights that the central inspection team has pointed out issues with steel production capacity, indicating a potential tightening of supply management in the industry [3] - Despite current challenges, the demand for steel is expected to stabilize or slightly increase due to government policies aimed at economic growth, particularly in real estate and infrastructure [3] Supply Situation - As of September 12, the capacity utilization rate for blast furnaces in sampled steel companies is 90.2%, an increase of 4.39 percentage points week-on-week [23] - The average daily pig iron production is 2.4055 million tons, which is an increase of 117,100 tons week-on-week [23] - The total production of five major steel products is 7.448 million tons, a decrease of 51,800 tons week-on-week [23] Demand Situation - The consumption of five major steel products reached 8.433 million tons as of September 12, an increase of 155,000 tons week-on-week [31] - The transaction volume of construction steel by mainstream traders is 103,000 tons, reflecting a week-on-week increase of 6.32% [31] Inventory Situation - Social inventory of five major steel products is 10.951 million tons, an increase of 174,100 tons week-on-week [39] - Factory inventory of five major steel products is 4.195 million tons, a decrease of 35,000 tons week-on-week [39] Price & Profit Situation - The comprehensive index for ordinary steel is 3,489.7 yuan/ton, a slight increase of 0.71 yuan/ton week-on-week [45] - The profit for rebar produced in blast furnaces is -14 yuan/ton, a decrease of 8.0 yuan/ton week-on-week [54] - The average cost of pig iron is 2,379 yuan/ton, a decrease of 17.0 yuan/ton week-on-week [54] Raw Material Prices - The spot price index for Australian iron ore (62% Fe) is 796 yuan/ton, an increase of 11.0 yuan/ton week-on-week [68] - The price for primary metallurgical coke is 1,770 yuan/ton, remaining stable week-on-week [68]

Investment Rating - The investment rating for the steel industry is Neutral, maintained [5] Core Insights - The steel industry continues to experience an oversupply situation, leading to a decline in steel prices and a year-on-year revenue decrease of 9% for the first half of 2025 and 8% for Q2 2025, although there was a quarter-on-quarter increase of 4% in Q2 [2][21] - On the cost side, the decline in raw material prices has been greater than that of finished steel, resulting in a year-on-year cost reduction of 11% for the first half of 2025 and 10% for Q2 2025, with a quarter-on-quarter increase of 3% in Q2 [2][24] - Profitability has significantly improved, with a year-on-year increase of 2540% in non-recurring profit for the first half of 2025 and 211% for Q2 2025, alongside a quarter-on-quarter increase of 47% [2][24] - The return on equity (ROE) for listed steel companies has shown recovery, with an ROE of 2.67% for the first half of 2025, up by 2.01 percentage points year-on-year, and 3.22% for Q2 2025, up by 1.87 percentage points year-on-year [2][24] Summary by Sections Revenue - The steel industry continues to face an oversupply, with revenues decreasing by 9% year-on-year in the first half of 2025 and 8% in Q2 2025, despite a quarter-on-quarter increase of 4% in Q2 [2][21][22] Cost - The cost of steel companies has decreased by 11% year-on-year in the first half of 2025 and by 10% in Q2 2025, with a quarter-on-quarter increase of 3% in Q2, driven by a larger decline in raw material prices compared to finished steel [2][24] Profit - Non-recurring profits have seen a substantial increase, with a year-on-year growth of 2540% in the first half of 2025 and 211% in Q2 2025, along with a quarter-on-quarter increase of 47% in Q2 [2][24] Return on Equity - The ROE for the steel industry has improved, reaching 2.67% in the first half of 2025, an increase of 2.01 percentage points year-on-year, and 3.22% in Q2 2025, an increase of 1.87 percentage points year-on-year [2][24]