Zhi Tong Cai Jing·2025-12-22 07:36Core Viewpoint - The steel industry is rated as "overweight" by Guotai Junan, with expectations of supply-side contraction and gradual recovery of the steel fundamentals [1] Group 1: Demand and Supply - Demand for steel has decreased on a month-on-month basis, with total apparent consumption of five major steel products at 8.3528 million tons, down 0.53% month-on-month and 4.06% year-on-year [2] - Total steel production was 7.9797 million tons, reflecting a month-on-month decrease of 1.02%, while total inventory stood at 12.9478 million tons, down 2.8% month-on-month, maintaining a low level [2] - The operating rate of blast furnaces in 247 steel mills was 78.47%, a decrease of 0.16 percentage points from the previous week, indicating a continued decline in inventory [2] Group 2: Profitability - The average gross profit for rebar was estimated at 206 CNY per ton, an increase of 54 CNY per ton from the previous week, while hot-rolled coil gross profit averaged 8 CNY per ton, up 36 CNY per ton [3] - The profitability rate of 247 steel companies remained stable at 35.93% [3] - China's crude steel production in November was 6.987 million tons, down 10.9% year-on-year, while pig iron production was 6.234 million tons, down 8.7% year-on-year [3] Group 3: Future Outlook - Demand is expected to stabilize, while supply is anticipated to continue contracting, with the negative impact of the real estate sector on steel demand significantly diminishing [4] - Approximately 65% of steel companies are currently operating at a loss, indicating that market-driven supply adjustments are beginning to occur [4] - The steel fundamentals are expected to gradually improve as supply-side contraction persists [4]