Minsheng Securities·2025-06-20 12:32Supply Side - The steel industry is expected to undergo a new round of capacity clearance due to the urgent need for capacity regulation, product structure optimization, and corporate restructuring as domestic crude steel consumption peaks [1] - New regulations in 2025 will encourage companies to transition towards high value-added, low-carbon, and intelligent production, promoting industry concentration and optimizing industrial layout [1] - Policies such as ultra-low emission renovations and carbon emission trading markets will drive capacity optimization and accelerate the elimination of outdated capacity [1] Demand Side - Despite a decline in demand from real estate and infrastructure sectors, the overall steel demand is expected to remain stable due to support from manufacturing sectors like machinery, automotive, and shipbuilding [2] - The demand for steel in housing construction is anticipated to stabilize gradually, while infrastructure demand is expected to be supported by special government bonds [2] - Manufacturing steel demand is projected to increase as companies transition from destocking to restocking, aided by improving profits and policies to boost domestic demand [2] Raw Material Side - The supply and demand for iron ore and coking coal are expected to become more balanced, with new iron ore projects coming online and coking coal supply remaining high [2] - The overall supply of raw materials is expected to remain high, while the demand for raw materials is limited due to stagnant iron and steel production, leading to improved profit margins for steel mills [2] Investment Recommendations - The report suggests focusing on leading steel companies and those with elastic production capacity, as steel demand is expected to exceed expectations and remain stable in the long term [3] - Key companies recommended include Baosteel, Hualing Steel, and Nanjing Steel, with attention to flexible production companies like Liugang and Shandong Steel [3] - In the special steel sector, companies with strong performance such as Xianglou New Materials and Jiuli Special Materials are highlighted for their growth potential [3] Key Forecasts - The report provides forecasts for steel consumption across various sectors, indicating a decline in housing steel consumption but growth in machinery and automotive sectors [31] - The total steel demand is projected to decrease slightly from 101,300 million tons in 2022 to 99,529 million tons in 2025, reflecting a gradual stabilization in demand [31] Manufacturing Sector Insights - The manufacturing sector is expected to maintain resilience, with fixed asset investment showing a cumulative year-on-year increase of 8.8% in early 2025 [59] - Specific manufacturing segments such as metal cutting machine tools and excavators are experiencing high growth rates, contributing positively to steel demand [62] - The automotive sector is projected to see an increase in steel consumption, driven by rising production and the growing share of SUVs, with an expected steel demand of 6,412 million tons in 2025 [64][65] Export Dynamics - China's net steel exports are expected to increase significantly, with a net export of 3,883 million tons in early 2025, driven by competitive pricing and strong oil and gas demand in regions like Southeast Asia and the Middle East [77][78]