波澜不惊，蓄势新生

1. Report Industry Investment Rating - The investment rating for rebar and hot-rolled coil is "oscillation" [1] 2. Core Viewpoints of the Report - In a neutral scenario, the terminal demand for steel in 2026 is expected to be roughly flat year-on-year. Domestic demand will see limited changes, while external demand will remain a significant driver. The supply-side regulation, especially capacity reduction, will be a long-term task. Steel prices may gradually bottom out through oscillations in 2026, but the upward space and elasticity are still insufficient. The main operating ranges for rebar and hot-rolled coil主力 contracts are estimated to be 2950 - 3400 yuan/ton and 3050 - 3550 yuan/ton respectively. There are still risks of market decline in the first half of the year [1][3][143] 3. Summary by Directory 3.1 2025 Steel Market Review: Center of Gravity Moved Down, Narrow Oscillation - In 2025, steel prices showed a narrow oscillation pattern with a reduced fluctuation range and significantly lower volatility compared to the previous two years. The price center of gravity declined, but the downward trend was not smooth. In the first half of the year, steel prices oscillated downward due to factors such as US reciprocal tariffs and a significant weakening of coal and coke costs. Starting from late June, steel prices rebounded rapidly in a short period driven by low inventory support and "anti-involution" policy expectations. However, due to the suppression of real demand and the weakening of export orders, the price was under obvious upward pressure. After late July, steel prices gradually entered a stage of oscillatory decline, and the entire fourth quarter was almost in a state of narrow-range fluctuation [16] - The core reasons for the decline in volatility are twofold: 1) The increase in the weight of external demand led to a significant compression of the upward and downward space of steel prices. The increase in external demand and manufacturing demand provided a more solid cost support, and exports also provided a more obvious bottom support when domestic steel prices fell. However, when domestic prices rose to a level where export order-taking willingness weakened, it also formed an obvious upward pressure. 2) The overall supply-demand expectation gap in the market was not prominent. Although the reciprocal tariffs and "anti-involution" policies in the second and third quarters led to obvious changes in market expectations, they had limited impact on real supply and demand, making it difficult for the market to continuously trade on the changes at the expectation level [17] 3.2 Demand: Domestic Demand Calm, External Demand Still Supportive 3.2.1 Domestic Incremental Policy Expectations Insufficient, Supply-side Policies May Strengthen - The 2025 Central Economic Work Conference indicated that with the decline of external risks, the need to introduce incremental policies to hedge against the decline of external demand has decreased. The conference more clearly pointed out the contradiction of "strong supply and weak demand" in the domestic market and emphasized "optimizing supply", suggesting that policies will strengthen efforts on the supply side in 2026 and significantly speed up the construction of a unified national market [31] - In terms of fiscal and monetary policies, the 2026 fiscal policy and infrastructure investment will be relatively conservative. Monetary policy will focus on promoting a moderate rebound in inflation. The policy on "two new" and "two important" areas will shift from "strengthening" to "optimizing", and the real estate market will continue the tone of "supporting without boosting" [32] 3.2.2 Building Material Demand Hard to Improve, Focus on Fund Allocation Rhythm - In 2025, the real estate demand continued to be weak, and the decline in sales widened again. In 2026, the decline in real estate sales may continue, and the front-end investment is expected to continue to decline significantly, which will continue to drag down the steel demand [36][37] - In 2026, the expectation for infrastructure demand is not optimistic. In 2025, the fixed asset investment growth rate of traditional infrastructure declined significantly, mainly due to tight funds. In 2026, the fiscal policy will focus on structural optimization, and the scale of investment in traditional infrastructure is expected to be limited [46][47] 3.2.3 Manufacturing Demand Maintains Resilience, but Growth Rate Still at Risk of Decline - In 2025, the strong manufacturing demand was an important factor supporting the terminal demand for steel. The manufacturing PMI showed a pattern of strong supply and weak demand. The "two new" related replacement demand and strong exports were important factors supporting the steel demand in the manufacturing industry. However, there were no obvious signs of entering the replenishment cycle [59] - In 2026, the steel demand in the manufacturing industry is expected to continue to grow, but the overall growth rate may decline significantly compared to 2025. The "two new" policies will focus on optimization, and the incremental funds are not clear. The demand driven by "replacing the old with the new" may face problems such as demand front-loading and marginal decline in subsidy effects [59] - In 2026, the external demand for manufacturing terminals is expected to remain strong. In 2025, despite the impact of Sino-US trade frictions, the exports of core manufacturing terminal products continued to rise. With the progress of Sino-US trade negotiations and the increase in demand from emerging markets, indirect exports are expected to continue to be an important driving force for steel demand in 2026 [73] 3.2.4 Direct Exports: Impact of License System to be Observed, Medium and Long-term Outlook Depends on Overseas Demand - Since January 1, 2026, the export license management system for some steel products will be implemented, which may impose certain policy constraints on the compliance of export entities, the variety structure, and quality of exported steel. However, the specific implementation scale and license issuance situation still need to be observed [88] - In 2025, the direct exports of steel and semi-finished products showed an obvious characteristic of "trading volume at the expense of price", and the net export volume is expected to reach about 125 million tons. The export variety and destination structures have changed significantly. Overseas trade frictions continue to increase, and the pressure from EU carbon tariffs and overseas anti-dumping in 2026 remains high [89][90] - In the medium and long term, the key factors affecting steel exports are the strength of overseas demand and the speed of overseas steel supply increase. Based on the forecast of the World Steel Association, the global crude steel demand will continue to increase slightly by about 1% in 2026. Although the overall scale of steel exports in 2026 is not expected to be pessimistic, the export in the first half of the year may be suppressed if the regional price difference cannot be widened [105] 3.3 Supply: "Anti-involution" Policy Still Unclear, Cost-based Pricing Pattern Remains 3.3.1 Implementation of Steel Industry "Anti-involution" Expected to be a Long-term Process - The market has high expectations for the "anti-involution" policy in the steel industry, mainly due to the long-term low profitability of the steel industry and the need to stabilize the prices of upstream and midstream products in the black industry chain to prevent the decline of PPI [110] - The implementation of supply-side policies in the steel industry is difficult to be as rapid and drastic as in the 2016 cycle. Possible directions for capacity reduction in the future include the full completion of ultra-low emission transformation and the verification of steel production capacity and overproduction control similar to that in the coal industry. However, there are still many uncertainties and difficulties in implementation [111][112] - In 2026, the market is expected to trade the change in production volume from a more market-oriented rather than administrative perspective. The decline in production volume is more likely to be due to terminal demand factors, and the improvement of steel mill profits requires substantial capacity compression [113] 3.3.2 Driving Force for Steel Mill Profit Improvement Still Depends on Capacity Reduction - Under the neutral scenario, the profit improvement space for steel products in 2026 will still be limited, and the industry will generally remain around the break-even point. In 2025, the profit of steel mills showed a pattern of initial improvement and then compression, and the electric furnace was in a loss state for most of the time [121] - In 2026, it is still difficult to provide profits for all production capacities. The marginal supply will mostly be in a loss state, and the gross profit of blast furnaces in the low-cost area will be difficult to break through the 200 yuan/ton range. The substantial reduction of production capacity is the key to breaking through the profit center and space [122] 3.3.3 Steel Price Valuation Still Anchored to Cost, Market Contradiction Focuses on Coils - In 2026, the overall steel price valuation is expected to continue to be anchored to the cost. The increase in iron ore supply is at risk, but the cost center may not move down significantly. The coking coal price is unlikely to fall below the 2025 low. The steel price is expected to be difficult to fall below the 2025 low without a significant weakening of demand. The upward movement of steel prices will be restricted by the inability to provide profits for all production capacities and the export order situation [132] - For the steel price valuation to break through upward in 2026, two conditions are required: the substantial implementation of the "anti-involution" policy in the domestic steel industry and the improvement of real demand driven by overseas loose monetary and fiscal policies with smooth price and cost transmission [132] - Since the second half of 2024, the actual supply of building materials has decreased significantly, and the rebar inventory level has dropped significantly. In 2026, this situation is expected to continue, and rebar may be in a relatively tight state periodically. Currently, the inventory of coils and non-five major varieties is relatively high and the de-stocking is slow. Therefore, attention should be paid to the potential supply pressure and contradiction of coils and non-five major steel products in 2026 [133][140] 3.4 2026 Steel Supply and Demand Outlook and Market Trading Logic - Under the neutral scenario, the supply and demand contradiction in the steel market in 2026 is still not prominent. The accelerated release of overseas liquidity is one of the most important macro logics, which is expected to push up inflation, but the boost to real demand and the smoothness of price transmission need to be observed. The domestic demand will see limited substantial changes, and the supply-side regulation related to "anti-involution" will be a relatively long-term task. The steel price may gradually bottom out through oscillations in 2026, but the upward space and elasticity are still insufficient [143] - In the first half of 2026, the market still faces downward risks. The actual implementation of the steel export license management system is yet to be confirmed, and the real demand in spring is expected to be weak. Attention should be paid to the inventory risk in spring. In the second half of 2026, the probability of inflation rising and domestic incremental policy implementation will increase, and the "anti-involution" policy path may become clearer, which may drive up the steel price and profit [144]