智通财经网·2025-08-28 07:23Core Viewpoint - The steel industry is expected to experience a turning point in 2025, with demand stabilizing and supply-side reductions contributing to recovery after a prolonged period of losses since 2021 [1] Supply Analysis - The expansion cycle of steel production capacity has ended, and the capacity utilization rate remains high, leading to a forecast of reduced steel output in the future. As of January to July 2025, China's crude steel production was 594 million tons, a year-on-year decrease of 3.10% [1] - The steel industry has been in a state of loss since the third quarter of 2022, prompting some production capacity to be reduced or halted. The market is beginning to clear, and a cyclical upward trend is anticipated as supply contracts [1] - If supply-side policies are implemented, the speed of supply contraction may accelerate, leading to a quicker industry recovery [1] Demand Analysis - Domestic demand for steel is primarily influenced by real estate, infrastructure, and manufacturing sectors. The ongoing decline in the real estate sector has significantly reduced its share of steel demand, but the negative impact is expected to diminish [2] - Demand from the infrastructure and manufacturing sectors is projected to grow steadily, while steel exports maintained a relatively fast year-on-year growth in the first seven months [2] - Overall, steel demand is expected to gradually stabilize [2] Price, Cost, and Profitability Analysis - Short-term steel prices are influenced by changes in domestic demand, while long-term prices depend on marginal supply and demand changes [3] - The cost structure of the steel industry is heavily reliant on raw materials, with iron ore and coking coal accounting for approximately 70% of total costs. China's dependence on imported iron ore necessitates close monitoring of international supply and demand [3] - The outlook suggests a loosening of the fundamentals for iron ore and coal, with expectations of declining prices for coking coal and iron ore, which will aid in the recovery of steel industry profits [3]