Core Viewpoint - The steel industry is showing signs of recovery in October 2025, with the PMI rising to 49.2%, ending a two-month decline, although challenges such as high raw material prices and inventory pressures remain [1][2]. Demand Recovery - October saw a recovery in steel demand due to the resumption of outdoor construction post-holidays and a lack of adverse weather in northern regions, but the real estate sector remains in deep adjustment, limiting overall market demand [2][3]. - The new orders index increased to 47.6%, up 2.4 percentage points, indicating some improvement in demand, but still within a contraction zone [3]. - Export orders showed significant improvement, with the new export orders index rising to 54.3%, the highest in nearly 20 months, driven by price differentials and overseas demand [3]. Production Trends - Steel production stabilized in October, with the production index rising to 49.8%, up 4.1 percentage points, indicating a recovery in production activities [5]. - Despite improvements in both supply and demand, the recovery in demand is weaker than the increase in supply, leading to continued inventory pressures for steel mills [5]. Raw Material Prices - Raw material prices remain high, with the purchasing price index exceeding 70%, indicating increased cost pressures for steel manufacturers [8]. - Prices for different raw materials are showing divergence, with iron ore prices stabilizing, scrap steel prices declining, and coke prices rising due to supply constraints [8]. Price and Profitability - Steel prices have shown a downward trend, with the Shanghai rebar price index dropping from 3176 CNY/ton to 3122 CNY/ton during October, leading to further compression of profit margins for steel mills [11]. - The overall cost pressure on steel manufacturers has increased compared to September, despite some recovery in demand [11]. Future Outlook - In November, steel demand is expected to show a "first rise then fall" trend, supported by construction activities and export resilience, but constrained by ongoing weakness in the real estate sector and seasonal factors [12]. - Steel production is anticipated to contract due to environmental restrictions in northern regions and a shift from peak to off-peak demand [15].

Core Insights - The manufacturing PMI in China rose to 49.8% in September, indicating a slight recovery but still below the expansion threshold [1] - The non-manufacturing business activity index decreased to 50.0%, reflecting a slight slowdown in non-manufacturing activities [1] Manufacturing Sector - The manufacturing production index increased to 51.9%, marking a continuous expansion for five months [4] - The purchasing volume index rose to 51.6%, indicating improved procurement activities [4] - New orders index reached 49.7%, showing a stabilization in market demand [4] - The export new orders index improved to 47.8%, suggesting a narrowing decline in export demand [4] - The manufacturing purchase price index was 53.2%, while the factory price index fell to 48.2%, indicating mixed price trends across sectors [5] Non-Manufacturing Sector - The non-manufacturing business activity index remained stable at 50.0%, with the construction index at 49.3% and the services index at 50.1% [8] - The business activity expectation index for non-manufacturing remained above 55%, indicating stable optimism among enterprises [8] - The postal industry showed significant growth, with indices above 60%, reflecting active online shopping [8][9] Future Outlook - The manufacturing sector is expected to see continued growth in Q4, driven by macro policies and seasonal demand [5] - Non-manufacturing activities are anticipated to stabilize and recover, supported by year-end effects and holiday demand [10]