Investment Rating - The report maintains a "Buy" rating for the company [4][9] Core Views - The company reported a revenue of 94.598 billion yuan for the first three quarters of 2025, a year-on-year decrease of 14.96%, while the net profit attributable to shareholders was 2.510 billion yuan, an increase of 41.72% year-on-year [1][4] - In Q3, the company achieved a revenue of 31.804 billion yuan, down 10.59% year-on-year, but the net profit increased by 73.22% year-on-year to 762 million yuan [1] - The report highlights that the company's production and operations remained stable in Q3, with minor fluctuations in production and sales compared to Q2 [1][2] Summary by Sections Financial Performance - For Q3, the gross margin was 9.81%, up 2.96 percentage points year-on-year, and the net profit margin was 3.31%, up 1.14 percentage points year-on-year [1] - The report projects the company's EPS for 2025-2027 to be 0.52, 0.58, and 0.64 yuan respectively, with corresponding PE ratios of 11, 10, and 9 times [2][3] Industry Insights - The steel industry is undergoing capacity replacement policies that emphasize reduction and green transformation, with a limited window for capacity expansion through external purchases [2] - The report anticipates that the ongoing supply-side reforms and the gradual elimination of outdated capacity will benefit leading companies in the industry [2]

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints of the Report - On October 28, the JM2601 contract of coking coal closed at 1242.0, down 0.76%. The spot price of Tangshan Mongolian No.5 clean coal was reported at 1460, equivalent to 1240 on the futures market. Technically, the daily K - line is above the 20 - day and 60 - day moving averages. It should be treated as a wide - range oscillation, and investors are advised to control risks [2]. - On October 28, the J2601 contract of coke closed at 1747.5, down 0.96%. The second - round price increase of coke has been implemented. Technically, the daily K - line is above the 20 - day and 60 - day moving averages. It is driven by cost and should be treated as a wide - range oscillation, and investors are advised to control risks [2]. 3. Summary According to Relevant Catalogs 3.1 Futures Market - The closing price of the JM main contract was 1242.00 yuan/ton, down 21.50 yuan; the closing price of the J main contract was 1747.50 yuan/ton, down 32.00 yuan [2]. - The JM futures contract position was 911,218.00 lots, down 16,022.00 lots; the J futures contract position was 49,303.00 lots, down 710.00 lots [2]. - The net position of the top 20 coking coal contracts was - 63,323.00 lots, up 1,548.00 lots; the net position of the top 20 coke contracts was - 4,432.00 lots, up 44.00 lots [2]. - The JM5 - 1 monthly contract spread was 65.50 yuan/ton, up 3.00 yuan; the J5 - 1 monthly contract spread was 129.50 yuan/ton, down 1.00 yuan [2]. - The coking coal warehouse receipts were 0.00, down 100.00; the coke warehouse receipts were 2,070.00, unchanged [2]. 3.2 Spot Market - The price of Ganqimao Mongolian No.5 raw coal was 1,135.00 yuan/ton, up 5.00 yuan; the price of Tangshan Grade - 1 metallurgical coke was 1,775.00 yuan/ton, up 55.00 yuan [2]. - The price of Russian prime coking coal forward spot (CFR) was 157.50 US dollars/wet ton, up 2.50 US dollars; the price of Rizhao Port quasi - Grade - 1 metallurgical coke was 1,570.00 yuan/ton, up 50.00 yuan [2]. - The price of Australian imported prime coking coal at Jingtang Port was 1,700.00 yuan/ton, unchanged; the price of Shanxi - produced prime coking coal at Jingtang Port was 1,760.00 yuan/ton, unchanged [2]. - The price of medium - sulfur prime coking coal in Lingshi, Jinzhong, Shanxi was 1,520.00 yuan/ton, up 70.00 yuan; the price of Inner Mongolia Wuhai - produced coking coal ex - factory was 1,280.00 yuan/ton, unchanged [2]. - The basis of the JM main contract was 278.00 yuan/ton, up 91.50 yuan; the basis of the J main contract was 27.50 yuan/ton, up 87.00 yuan [2]. 3.3 Upstream Situation - The daily output of clean coal from 314 independent coal washing plants was 26.70 million tons, up 0.60 million tons; the weekly inventory of clean coal from 314 independent coal washing plants was 289.60 million tons, down 0.80 million tons [2]. - The weekly capacity utilization rate of 314 independent coal washing plants was 0.37%, up 0.01%; the monthly raw coal output was 41,150.50 million tons, up 2,100.80 million tons [2]. - The monthly import volume of coal and lignite was 4,600.00 million tons, up 326.00 million tons; the daily average output of raw coal from 523 coking coal mines was 191.00 thousand tons, down 5.10 thousand tons [2]. - The weekly inventory of imported coking coal at 16 ports was 507.18 million tons, up 19.02 million tons; the weekly inventory of coke at 18 ports was 260.79 million tons, up 8.14 million tons [2]. - The weekly total inventory of coking coal of all - sample independent coking enterprises was 1,029.70 million tons, up 32.33 million tons; the weekly inventory of coke of all - sample independent coking enterprises was 58.64 million tons, up 1.35 million tons [2]. - The weekly inventory of coking coal of 247 steel mills nationwide was 782.96 million tons, down 5.36 million tons; the weekly inventory of coke of 247 sample steel mills was 633.16 million tons, down 6.28 million tons [2]. - The weekly available days of coking coal of all - sample independent coking enterprises was 12.77 days, down 0.13 days; the weekly available days of coke of 247 sample steel mills was 11.07 days, down 0.12 days [2]. 3.4 Industry Situation - The monthly import volume of coking coal was 1,092.36 million tons, up 76.14 million tons; the monthly export volume of coke and semi - coke was 54.00 million tons, down 1.00 million tons [2]. - The monthly output of coking coal was 3,696.86 million tons, down 392.52 million tons; the weekly capacity utilization rate of independent coking enterprises was 73.47%, down 0.77% [2]. - The weekly profit per ton of coke of independent coking plants was - 41.00 yuan/ton, down 28.00 yuan/ton; the monthly output of coke was 4,255.60 million tons, down 4.10 million tons [2]. 3.5 Downstream Situation - The weekly blast furnace operating rate of 247 steel mills nationwide was 84.73%, up 0.48%; the weekly blast furnace iron - making capacity utilization rate of 247 steel mills was 89.92%, down 0.39% [2]. - The monthly output of crude steel was 7,349.01 million tons, down 387.84 million tons [2]. 3.6 Industry News - The second - round price increase of coke has been fully implemented. The mainstream steel mills in Shandong and Hebei have issued letters to increase the coke purchase price, with a wet - quenching increase of 50 yuan/ton and a dry - quenching increase of 55 yuan/ton, effective from 0:00 on October 27 [2]. - The latest forecast of the International Monetary Fund (IMF) shows that the US government debt - to - GDP ratio will reach 143.4% by 2030, exceeding that of Italy and Greece for the first time this century [2]. - On October 27, Premier Li Qiang of the State Council attended the Fifth Leaders' Meeting of the Regional Comprehensive Economic Partnership Agreement in Kuala Lumpur, Malaysia. The parties to the agreement should cooperate more closely to jointly address challenges [2]. - US President Trump said that Russian President Putin should end the war in Ukraine instead of testing nuclear missiles, and added that the US has deployed a nuclear - powered submarine near the Russian coast [2]. - On October 25, the Datong - Qinhuangdao Railway, the major "west - to - east coal transportation" artery in China, completed its autumn maintenance, laying a foundation for coal supply during the coming winter and spring [2].

Core Insights - The revised 2025 version of the "Steel Industry Capacity Replacement Implementation Measures" introduces stricter regulations on "zombie capacity," prohibiting the replacement of capacity that has not been built or has operated less than 90 days per year for two consecutive years [1] - New regulations on capacity trading have been established, allowing capacity replacement between different enterprises for iron and steel within two years of the implementation of the measures, after which it will be prohibited [1] Industry Overview - The Steel ETF (515210) tracks the CSI Steel Index (930606), which includes listed companies involved in ordinary steel, special steel, and metal products, reflecting the overall performance of the steel industry [1] - The index consists mainly of steel manufacturing companies, exhibiting strong cyclical characteristics, with a focus on raw materials, indicating a close relationship between the steel industry and market dynamics as well as economic cycles [1]

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - The report discusses the revised "Steel Industry Capacity Replacement Implementation Measures (Draft for Comments)" aimed at promoting high-quality development in the steel industry by tightening capacity replacement rules and enhancing regulatory measures [2][5] - The new draft increases the capacity replacement ratio to a minimum of 1.5:1 nationwide, with specific exceptions for newly acquired compliant capacity through mergers and acquisitions [2][3] - The draft prohibits the transfer of steel production capacity into key regions and sets a 24-month deadline for capacity replacement among different enterprises [2][4] - The report emphasizes the need for capacity to be strictly linked to smelting equipment, preventing the separation of capacity and equipment [4][5] - The new measures are expected to create a more orderly competitive landscape in the steel industry, focusing on quality development and structural optimization [5][6] Summary by Sections Policy Changes - The draft policy tightens capacity replacement rules, requiring a uniform replacement ratio of 1.5:1 across all provinces, with limited exceptions for specific cases [2][3] - Key regions are prohibited from increasing total steel production capacity and transferring capacity from non-key to key regions [2][3] Regulatory Enhancements - The draft introduces stricter regulations to ensure that replaced capacity is used once and aligns with energy efficiency and environmental standards [4][5] - It establishes a provincial-level acceptance procedure and annual self-inspection to enhance oversight [4][5] Industry Outlook - The report anticipates that the implementation of these measures will lead to a reduction in excess capacity and an improvement in industry profitability, benefiting leading companies with strong cost control and high margins [6] - Investment opportunities are highlighted in companies with advanced equipment and strong environmental standards, as well as those positioned to benefit from the new energy cycle [6]

Core Viewpoint - The Ministry of Industry and Information Technology (MIIT) has released a draft for public consultation regarding the implementation of capacity replacement in the steel industry, aiming to optimize capacity and promote high-quality development in the sector [1][3]. Summary by Sections Purpose and Basis - The draft aims to implement the spirit of the 20th National Congress of the Communist Party and related policies to accelerate the reduction and quality improvement of existing steel production capacity, optimize structure, and promote market balance [3]. Scope of Application - The measures apply to all types of enterprises within China that are involved in the construction, reconstruction, expansion, or major repairs of iron and steel smelting equipment [3]. Definitions - "Equal replacement" refers to the construction capacity being equal to the capacity being exited, while "reduction replacement" indicates that the construction capacity is less than the exited capacity [3]. Capacity Replacement Ratio - The capacity replacement ratio for iron and steel production in all provinces must not be less than 1.5:1, with a lower ratio of 1.25:1 applicable to newly acquired compliant capacity post-June 1, 2021 [1][10]. Conditions for Equal Replacement - Equal replacement can be implemented under three conditions: internal major repairs without changing equipment type, special steel production using advanced processes, and projects in Qinghai and Tibet [1][10]. Encouragement of Green Practices - The draft encourages the efficient use of scrap steel, orderly development of electric furnace steel, and the adoption of green low-carbon technology in existing equipment [1][9]. Prohibited Capacity for Replacement - Six categories of capacity are prohibited from being used for replacement, including capacities listed for reduction tasks and those not actually constructed before the announcement of the replacement plan [4]. Cross-Regional Replacement - Enterprises are encouraged to implement cross-regional capacity replacement, with specific verification and public announcement requirements for capacity transfers [11]. Project Management and Verification - The draft outlines strict management and verification processes for capacity replacement projects, including public announcements and compliance checks by provincial departments [14][13]. Policy Transition - Existing capacity replacement plans announced before August 23, 2024, will continue to be executed under the original guidelines, ensuring policy continuity [15][16].

Core Viewpoint - The Ministry of Industry and Information Technology (MIIT) is soliciting public opinions on the draft implementation measures for capacity replacement in the steel industry, focusing on the regulation of capacity exit and replacement processes [1] Summary by Relevant Sections Capacity Exit Regulation - For legally compliant smelting equipment built after 2016, the quantity of capacity to be exited will be determined according to the "Capacity Calculation Table" [1] - For smelting equipment listed in the State Council's inventory, the exit capacity will be based on the capacity numbers in that inventory [1] - If there is a mismatch between the smelting equipment and the capacity in the State Council's inventory, the relevant smelting equipment will have its capacity proportionally allocated based on the "Capacity Calculation Table" [1] Capacity Replacement Procedures - Any capacity replacement plans and allocation lists that have been announced by provincial industrial and information authorities (or central enterprises) before August 23, 2024, will be considered valid based on the announcement [1] - The capacity of newly constructed smelting equipment for phosphorus removal must comply with the capacity replacement procedures [1]

Core Viewpoint - The Ministry of Industry and Information Technology has revised the "Implementation Measures for Capacity Replacement in the Steel Industry" and is seeking public opinions on the draft, which outlines specific criteria for capacity replacement in the steel sector [1] Summary by Relevant Categories Policy Changes - The draft specifies that only smelting equipment listed in the State Council's capacity reduction plan from 2016 and legally compliant smelting equipment built since 2016 can be used for capacity replacement [1] Exclusions for Capacity Replacement - Six categories of capacity are explicitly prohibited from being used for replacement: 1. Capacity included in the steel industry's capacity reduction tasks and those that received financial support for exit [1] 2. Capacity from smelting equipment that was not actually built and put into production before the provincial industrial and information authorities announced the capacity replacement plan [1] 3. Capacity from outdated production equipment as defined in the "Guidance Catalog for Industrial Structure Adjustment" [1] 4. Capacity from iron and steel equipment that has operated less than 90 days per year for two consecutive years after the implementation of this measure [1] 5. Capacity from non-steel industry smelting equipment such as casting, forging, and ferroalloy [1] 6. Capacity from auxiliary production equipment like vanadium converters and secondary refining furnaces that have not completed capacity replacement procedures or are not listed in the State Council's capacity reduction plan [1]

Core Viewpoint - The company has announced the upgrade and construction of its blast furnace equipment, specifically the replacement of existing furnaces with new ones, which will increase production capacity from 2.71 million tons to 3.08 million tons [1][2]. Group 1: Project Details - The original plan involved replacing two existing 450m³ furnaces and two 1000m³ furnaces with two 1550m³ furnaces, with a total production capacity of 2.71 million tons per year [1]. - The revised plan now includes replacing the existing furnaces with one 2290m³ furnace and one 1200m³ furnace, resulting in an increased capacity of 3.08 million tons [1][2]. - The replacement ratio has changed from 1.25:1 to 1.1:1 [2]. Group 2: Regulatory Compliance - The project has been verified and approved by the Liaoning Provincial Department of Industry and Information Technology, confirming that it meets the requirements of the "Steel Industry Capacity Replacement Implementation Management Measures" [2]. - The new 2290m³ furnace has been confirmed to align with the announced capacity replacement plan and is deemed ready for production [2].

Report Industry Investment Rating - Not provided in the content Core Viewpoints - The market sentiment has warmed up, but the weak reality still dominates. The steel mills have proposed the first round of price cuts for coke. The main contract of coke is expected to fluctuate weakly [7]. Summary by Directory 1. Week - on - Week Summary - **Macro - level**: National ministries are promoting the regulation of national crude steel production, the central bank has lowered the deposit - reserve ratio by 0.5 percentage points, and the personal housing provident fund loan interest rate has been cut by 0.25 percentage points since May 8. Overseas, the Fed maintained the federal funds rate, and Trump and the UK Prime Minister reached a limited bilateral trade agreement [7]. - **Supply - demand and profit**: In the short term, the supply elasticity of coke is better than that of coking coal, and the growth space of hot metal output is limited. The average profit per ton of coke for 30 independent coking plants is 7 yuan/ton, and steel mills have proposed the first - round price cut after the festival [7]. - **Technical aspect**: The weekly K - line of the main coke contract is below the 60 - day moving average, showing a bearish trend [7]. - **Strategy suggestion**: The market sentiment has warmed up, with mainly rigid - demand restocking of coal. The main coke contract should be treated as fluctuating weakly [7]. 2. Futures and Spot Markets - **Futures market**: As of May 16, the position of coke futures contracts was 52,600 lots, a decrease of 631 lots from the previous period. The 1 - 9 contract month - spread was 27 yuan/ton, a decrease of 0.50 yuan/ton. The registered warehouse receipt volume was 1,570 lots, an increase of 380 lots, and the futures screw - coke ratio was 2.13, an increase of 0.04 [11][18]. - **Spot market**: As of May 15, the coke closing price at Rizhao Port was 1,510 yuan/ton, unchanged from the previous period; the ex - factory price of coking coal in Wuhai, Inner Mongolia was 1,130 yuan/ton, a decrease of 20 yuan/ton. As of May 16, the coke basis was 38 yuan/ton, an increase of 6 [24]. 3. Industrial Chain Situation - **Production**: In March, the output of above - scale industrial raw coal was 440 million tons, a year - on - year increase of 9.6%. From January to March, it was 1.2 billion tons, a year - on - year increase of 8.1%. In March 2025, China's coking coal output was 4.16147 million tons, a year - on - year increase of 8.23%. The capacity utilization rate of 230 independent coking enterprises was 75.23%, an increase of 0.18%, and the daily coke output was 53.63, an increase of 0.13 [29][33]. - **Profit**: The average profit per ton of coke for 30 independent coking plants was 7 yuan/ton [33]. - **Downstream situation**: As of May 16, the daily average hot metal output of 247 steel mills was 2.4477 million tons, a decrease of 0.87 million tons from the previous week. As of May 9, the total coke inventory was 9.5444 million tons, a decrease of 150,000 tons from the previous period, a year - on - year increase of 17.36% [37]. - **Inventory structure**: The port inventory decreased, and the steel mill inventory decreased seasonally. On May 16, the inventory of 18 ports was 2.8138 million tons, a decrease of 23,000 tons; the inventory of 247 steel mills was 6.638 million tons, a decrease of 72,300 tons, and the available days were 12.01 days, a decrease of 0.09 days [42]. - **Fundamental data**: From January to March 2025, the coke export volume was 1.77 million tons, a year - on - year decrease of 26.50%. In April 2025, China exported 10.462 million tons of steel, and from January to April, the cumulative export was 37.891 million tons, a year - on - year increase of 8.20%. In March 2025, the second - hand housing price index of 70 large and medium - sized cities decreased by 0.20% month - on - month. As of the week of May 11, the commercial housing transaction area of 30 large - and medium - sized cities was 1.6404 million square meters, a month - on - month increase of 5.27%. The transaction area of first - tier cities was 540,000 square meters, a month - on - month increase of 5.87%, and that of second - tier cities was 752,500 square meters, a month - on - month decrease of 3.07% [47][51][55].

Report Industry Investment Rating - Not provided in the content Core Viewpoints - Macroscopically, the state is promoting national crude steel production control, the central bank has cut the reserve - requirement ratio, and the personal housing provident fund loan interest rate has been lowered. Overseas, the Fed maintained the interest rate, and a limited bilateral trade agreement was reached. The iron - alloy sector is under pressure, with negative production profits and weak steel demand expectations. The cost of electricity in Ningxia has decreased, and the technical trend of the silicon - iron main contract is bearish. It is recommended to treat the silicon - iron main contract as oscillating [6]. Summary by Directory 1. Week - on - Week Summary - **Macro Aspect**: The state is promoting crude steel production control, the central bank cut the reserve - requirement ratio by 0.5 percentage points, releasing about 1 trillion yuan of long - term liquidity, and the personal housing provident fund loan interest rate was cut by 0.25 percentage points. Overseas, the Fed maintained the federal funds rate target range at 4.25% - 4.50%, and a limited bilateral trade agreement was reached, with the UK buying $10 billion worth of Boeing aircraft [6]. - **Supply - Demand Aspect**: The iron - alloy sector is under pressure, with negative production profits. The profit in Inner Mongolia is - 230 yuan/ton, and in Ningxia is - 110 yuan/ton. Steel demand expectations are generally weak. Follow - up tariff conflicts may see new progress after the Sino - US talks [6]. - **Cost Aspect**: The electricity cost in Ningxia decreased by 1 cent, and the semi - coke price remained stable [6]. - **Technical Aspect**: The weekly K - line of the silicon - iron main contract is below the 60 - day moving average, showing a bearish trend [6]. - **Strategy Suggestion**: Treat the silicon - iron main contract as oscillating due to the decrease in supply and pressure on sector demand [6]. 2. Futures and Spot Market - **Futures Market**: As of May 9, the silicon - iron futures contract open interest was 473,800 lots, a week - on - week increase of 85,100 lots; the monthly spread was - 50, a week - on - week decrease of 126. The number of silicon - iron warehouse receipts was 18,908, an increase of 1,804. The spot price in Ningxia was 5,460 yuan/ton, a week - on - week decrease of 140 yuan/ton [12][18]. - **Spot Market**: As of May 9, the silicon - iron basis was - 82 yuan/ton, a week - on - week decrease of 24 [21]. 3. Industry Chain Situation - **Industry**: The silicon - iron operating rate increased, while demand decreased. The weekly demand for silicon - iron in five major steel types was 20,336.3 tons, a 2.00% decrease from last week. The national operating rate of 136 independent silicon - iron enterprises was 32.53%, an increase of 1.79%. The daily output was 14,700 tons, an increase of 550 tons. The inventory of 60 independent silicon - iron enterprises decreased by 11.83% to 73,700 tons [27][30]. - **Upstream**: As of May 6, the electricity price in Ningxia was 0.41 yuan/kWh, a decrease of 0.01 yuan/kWh, and in Inner Mongolia, it remained at 0.42 yuan/kWh. As of May 8, the semi - coke price remained at 665 yuan/ton. The production cost in Ningxia was 5,460 yuan/ton, a decrease of 160 yuan/ton, and in Inner Mongolia, it remained at 5,680 yuan/ton. The production profit in Ningxia was - 110 yuan/ton, a decrease of 40 yuan/ton, and in Inner Mongolia was - 230 yuan/ton, a decrease of 100 yuan/ton [34][39]. - **Downstream**: As of May 9, the daily average pig iron output of 247 steel mills was 2.4564 million tons, an increase of 0.0022 million tons from last week and 0.1114 million tons from last year. From January to March 2025, the total silicon - iron export volume was 90,500 tons, a 18.70% decrease from the same period last year. The silicon - iron tender price was 5,900 yuan/ton, a decrease of 280 yuan/ton compared to March [44].