Zhi Tong Cai Jing·2025-11-04 03:51Core Viewpoint - The steel industry is expected to gradually bottom out in demand, with supply-side adjustments beginning to take effect, leading to a potential recovery in the industry's fundamentals. If supply policies are implemented, the contraction in supply may accelerate, facilitating a quicker industry upturn. The industry maintains an "overweight" rating [1]. Group 1: Demand and Supply Dynamics - Last week, the apparent consumption of five major steel products reached 9.1642 million tons, an increase of 237,100 tons week-on-week. Construction steel consumption was 3.3127 million tons, up 160,300 tons, while plate consumption was 5.8515 million tons, up 76,800 tons [2]. - The total steel inventory stood at 15.1374 million tons, a decrease of 411,300 tons week-on-week, maintaining a low level. The operating rate of blast furnaces in 247 steel mills was 81.75%, down 2.96 percentage points week-on-week [2]. - The industry has been experiencing losses since Q3 2022, with nearly 40% of steel companies still in the red. Market-driven supply adjustments have begun to emerge [4]. Group 2: Profitability and Cost Trends - The average gross profit for rebar was 104.7 CNY/ton, down 21.4 CNY/ton week-on-week, while hot-rolled coil gross profit averaged 44.7 CNY/ton, up 28.6 CNY/ton. The profitability rate for 247 steel companies was 45.02%, a decrease of 2.6% [3]. - The expectation is that iron ore production will accelerate while demand remains subdued, leading to a gradual easing of iron ore prices and improving cost pressures for the steel industry [3]. Group 3: Future Outlook - The negative impact of the real estate sector on steel demand is expected to weaken, with stable growth anticipated in infrastructure and manufacturing steel demand. Steel exports from January to September maintained year-on-year growth [4]. - The recently released "Steel Industry Stabilization and Growth Work Plan (2025-2026)" emphasizes continued implementation of production reduction policies, aiming to balance supply and demand dynamically [4].