Zhi Tong Cai Jing·2025-08-31 12:42Core Viewpoint - The steel industry in China has strong global competitiveness but weak profitability, making it a key focus of the current "anti-involution" initiative [1][2][3] Industry Overview - The Ministry of Industry and Information Technology (MIIT) has issued a work plan for stabilizing growth in the steel industry, emphasizing the continuation of production reduction policies [3][4] - China's steel production accounts for over half of the global total, yet the average profit margin for listed steel companies in 2024 is projected to be -0.26%, highlighting the industry's profitability challenges [3] Policy Implications - The work plan aims to address the core contradiction of "excessive supply and insufficient effective demand" by prohibiting new capacity and implementing production cuts [3][4] - The plan is expected to serve as a breakthrough point for the "anti-involution" initiative, establishing a model for governance and accelerating results in the steel sector [3] Production Reduction Measures - Continued implementation of production reduction policies is anticipated to improve industry profits and prices [4] - Data from the National Bureau of Statistics indicates that crude steel production decreased by approximately 20 million tons year-on-year from January to July this year, with expectations for accelerated production cuts in September [4] Market Dynamics - The steel industry has faced persistent demand pressure since 2021 due to a sluggish real estate market, leading to structural issues [5] - The year 2025 is seen as a critical year for addressing the supply-demand imbalance, with phased policies expected to become a regular approach for capacity and production adjustments [5] Profit Cycle - Steel stocks are entering a second phase focused on profits, following a historical pattern where new profit cycles coincide with asset upturns [6] - The industry is expected to transition into a performance cycle centered on profits as production cuts are enforced [6]