钢铁行业周报：复苏预期交易下的三条主线

Investment Rating - The investment rating for the steel industry is Neutral, maintained [5]. Core Insights - This week, steel prices experienced a rise followed by a decline, reflecting a weak demand reality against a strong macro recovery expectation. Seasonal demand for steel has shown limited disturbance to prices, especially as December approaches, with expected trading weight likely to increase. Current steel price levels are not high, approximately 300 yuan/ton below the peak in early October. Positive macro expectations are anticipated to support price increases during the off-season [2][5]. - The report highlights three main lines of focus under the recovery expectation trading: 1) Valuation recovery of long-term undervalued state-owned enterprises; 2) Reversal of difficulties for companies under performance pressure; 3) Mergers and acquisitions [2][5]. Summary by Sections Steel Price Trends - Steel prices have fluctuated, with a notable rebound in state-owned enterprises following the release of market management guidelines by the CSRC. However, the off-season effect is deepening, leading to a decline in northern construction demand and a significant southward movement of northern materials, impacting prices in East and South China. Concerns over increased overseas trade friction and tariffs further suppress steel prices [5]. - The apparent consumption of steel increased by 0.69% week-on-week but decreased by 6.29% year-on-year. Long products saw a 1.97% increase week-on-week, while sheet products decreased by 0.39% [5]. Production and Profitability - Daily pig iron production decreased to 2.358 million tons, down 0.14 million tons per day from the previous week. Total steel production increased by 0.81% week-on-week but decreased by 5.01% year-on-year. Profitability is under pressure due to rising import iron ore prices, with the profitability rate of 247 surveyed steel mills at 54.55%, down 3.03 percentage points [5]. - Steel inventory continued to decline, with a 1.16% decrease week-on-week. Rebar inventory decreased by 0.09% week-on-week and 16.12% year-on-year, while hot-rolled inventory decreased by 2.23% week-on-week and 10.53% year-on-year [5]. Key Focus Areas - The report emphasizes three key areas of focus for investment: 1) Valuation recovery of long-term undervalued state-owned enterprises, particularly those meeting specific criteria set by the CSRC [5]. 2) Companies facing performance challenges may see significant improvements as macroeconomic conditions improve, with specific mention of Hualing Steel benefiting from rising steel prices [5]. 3) Mergers and acquisitions are expected to accelerate, potentially enhancing the asset quality and valuation of involved companies [5].