和讯·2025-07-11 10:00Core Viewpoint - The recent announcements from the Central Financial Committee regarding the governance of low-price disorderly competition and the orderly exit of backward production capacity have reignited optimism in the steel industry, leading to price increases in various steel products and stocks [1][2][6]. Group 1: Supply-Side Reform Restart - The Central Financial Committee's sixth meeting emphasized the need to promote the orderly exit of backward production capacity, marking the beginning of a new round of supply-side reform [2][3]. - The focus of the reform includes promoting high-quality production capacity and the consolidation of the industry through mergers and acquisitions [2][3]. - A joint initiative from 33 construction companies aims to combat "involution" in the industry, indicating a collective push for transformation [2]. Group 2: Steel Industry Dynamics - The China Iron and Steel Association has been actively promoting self-discipline among major steel companies to control production and reduce inventory [3][4]. - Major steel companies like China Baowu and Ansteel have undergone multiple rounds of restructuring, contributing to an increase in industry concentration from 41.4% in 2021 to 42% in 2024 [3]. - Current data indicates that while total crude steel capacity is not excessively overbuilt, actual production often exceeds designed capacity, leading to a higher overcapacity ratio [4]. Group 3: Cautious Optimism for Steel Prices - The phenomenon of "involution" in the steel industry is characterized by price competition leading to overall profit decline and resource wastage [5]. - The challenges facing the steel market are more complex than in previous cycles, with structural changes in demand and a weak real estate market limiting the potential for a repeat of past bullish trends [7]. - Despite the current low price levels of steel, the overall market environment is better than in 2015, but significant improvements in supply-demand dynamics are unlikely, necessitating close attention to policy implementation [7].