Core Viewpoint - The steel market is experiencing a stabilization in spot prices, but the basis is weakening, indicating potential shifts in supply and demand dynamics [1] Supply - Iron element production increased by 5% year-on-year from January to September, but the growth rate is expected to narrow due to high base effects from last year's fourth quarter [3] - There are signs of reduced iron water production, with a decrease of 10,000 tons to 2.39 million tons [3] - Production of the five major steel materials is stable year-on-year, with a slight increase in October, rising by 84,000 tons to 8.65 million tons [3] Demand - Domestic demand remains weak, but there are expectations of policy support in the fourth quarter, with the Ministry of Finance announcing an early issuance of local government debt limits for 2026 [4] - Steel exports remain high, with recent price declines providing support for exports [4] - Total demand for steel increased by 1.7 million tons to 8.92 million tons, indicating a recovery post-National Day holiday [4] Inventory - Inventory of the five major steel materials decreased by 270,000 tons to 15.548 million tons, with specific reductions in rebar and hot-rolled coil inventories [5] - Current production levels are below demand, suggesting that inventory levels may continue to decline seasonally [5] Profit and Cost - Steel profits have significantly declined from their previous highs, with the order of profitability being steel billets > hot-rolled coils > rebar > cold-rolled coils [2] - Coal prices remain strong, making it difficult for costs to decrease significantly [6] Market Outlook - The current demand is approaching seasonal peaks, and if maintained, inventory may shift to seasonal depletion [6] - Steel mills are expected to continue facing profit declines, which may suppress production levels [6]