Report Investment Rating - No investment rating for the industry is provided in the report. Core Viewpoints - The steel market fundamentals will remain weak in the next month. Before the Spring Festival, supply will stay low due to environmental production restrictions, maintenance, and profit constraints. Demand will further weaken seasonally in January, and inventory will enter an accumulation cycle. With the cost side seeing renewed supply disruptions and the strong performance of coking coal and coke futures driving a rebound in the black commodity sector, steel prices are expected to maintain a volatile pattern, with the reference range for rebar at 3000 - 3350 yuan/ton [3][47][48]. Summary by Directory 1. Market Review - In December, steel futures prices showed a volatile trend of rising first, then falling, and then rebounding, remaining basically flat month - on - month. Rebar performed stronger than hot - rolled coil. The main rebar contract rose 0.16% in the month, while the main hot - rolled coil contract fell 0.55%, narrowing the spread between hot - rolled coil and rebar. Macroscopically, the Fed cut interest rates by 25BP in December, and the Bank of Japan raised interest rates by 25BP. Domestically, the tone of the Central Economic Work Conference was stable, and policy expectations were in line with expectations. The implementation of steel export license management from January 1, 2026, may disrupt market sentiment in the short term. Industrially, rebar demand weakened in December, but production declined more significantly, resulting in smooth inventory depletion and inventory at a low level compared to the same period in recent years. Hot metal production continued to decline, iron ore prices were firm, and coking coal and coke spot prices dropped sharply, jointly driving the steel cost center to move down slightly [8]. 2. Steel Fundamental Analysis 2.1 Supply to Remain Low before Spring Festival - In December, steel mill production contracted due to environmental production restrictions and year - end maintenance. The average daily hot metal output of 247 steel mills dropped to 228.66 tons, a decrease of 6.8 tons from November. The weekly average output of the five major steel products decreased by 420,000 tons to 8.075 million tons, with a particularly prominent reduction in construction steel production. By process, long - process steel mills saw a more significant decline in production due to increased maintenance, while short - process steel mills increased production due to good profits. The blast furnace operating rate and capacity utilization rate both declined. In December, steel mill maintenance increased, raw material demand weakened, and costs decreased. The profitability of steel mills improved slightly, but due to weak demand in the off - season and inventory pressure, steel mills still had a strong willingness to cut production actively. It is expected that steel supply will remain low before the Spring Festival due to demand suppression and profit constraints [15]. 2.2 Inflection Point of Steel Inventory - In December, steel inventory depletion accelerated. The total inventory of the five major steel products decreased by 1.43 million tons to 12.58 million tons, with the most significant decline in rebar inventory, which decreased by 970,000 tons to 4.34 million tons. Hot - rolled coil inventory decreased by 240,000 tons to 3.77 million tons. Rebar inventory was at a low level, and some resource specifications were in short supply. The high - level hot - rolled coil inventory had significant pressure. The core driver of inventory depletion was the significant production cut by steel mills rather than demand. In January, with the expectation of some steel mill复产 and the further weakening of steel demand as the Spring Festival approaches, inventory will enter an accumulation cycle, and attention should be paid to the inventory accumulation speed and structural changes [17]. 2.3 Off - Season Demand Suppression - In December, steel demand was weak, showing obvious off - season characteristics. Domestic demand in real estate, infrastructure, and fixed - asset investment remained weak. Real estate development investment continued to decline, the growth of national fixed - asset investment turned negative, and manufacturing investment showed resilience but with a narrowing growth rate. Domestic demand significantly dragged down steel demand. The trading volume of building materials across the country declined in December, and the demand for construction steel contracted seasonally. By product, the weekly average apparent demand for rebar decreased by 156,000 tons to 2.03 million tons, while the weekly average apparent demand for hot - rolled coil decreased by 100,000 tons to 3.07 million tons due to the support of plate end - users such as home appliances and automobiles, showing better demand resilience. Steel exports remained strong, offsetting the weak domestic demand to some extent. However, the implementation of export license management for some steel products by the Ministry of Commerce since December may disrupt future export rhythms. It is expected that the demand trend will continue in January [23]. 2.4 Macroeconomic Policies Seek Progress while Maintaining Stability, but Weak Terminal Demand Persists - Domestically, the Central Economic Work Conference held from December 10 - 11, 2025, emphasized the general tone of seeking progress while maintaining stability and the implementation of more proactive macro - policies, including a more proactive fiscal policy and a moderately loose monetary policy. Regarding real estate, efforts will be made to stabilize the market, control new increments, reduce inventory, and optimize supply, and encourage the acquisition of existing commercial housing for affordable housing. Terminal demand continued to weaken. Real estate investment continued to decline, and the data on new housing starts and construction were deeply adjusted. From January to November, national real estate development investment was 785.91 billion yuan, a year - on - year decrease of 15.9%. Infrastructure investment continued to weaken month - on - month, with limited impetus for steel demand. Manufacturing showed strong resilience, and the automotive and home appliance industries performed well. In December, the Manufacturing Purchasing Managers' Index (PMI) was 50.1%, up 0.9 percentage points from the previous month, entering the expansion range. From January to November, China's automobile production and sales were 31.231 million and 31.127 million vehicles respectively, with year - on - year increases of 11.9% and 11.4%. From January 1, 2026, the implementation of export license management for some steel products aims to regulate exports, promote high - quality industry development, and maintain global supply - demand balance. From January to November, China's cumulative steel imports were 554,000 tons, a year - on - year decrease of 10.5%, and cumulative exports were 10.772 million tons, a year - on - year increase of 6.7% [30][32][33]. 3. Market Outlook - Supply: Steel mill production is contracting due to environmental production restrictions and year - end maintenance. The weekly average output of the five major steel products decreased by 420,000 tons to 8.075 million tons, with a particularly prominent reduction in construction steel production. In December, steel mill maintenance increased, raw material demand weakened, and costs decreased. Due to weak demand in the off - season and inventory pressure, steel mills still have a strong willingness to cut production actively. It is expected that steel supply will remain low before the Spring Festival due to demand suppression and profit constraints. - Demand: Steel demand is weak, showing obvious off - season characteristics. Real estate development investment continues to decline, the growth of national fixed - asset investment turns negative, and manufacturing investment shows resilience but with a narrowing growth rate. Domestic demand significantly drags down steel demand. The trading volume of building materials across the country declined in December, and the demand for construction steel contracted seasonally. Steel domestic demand is weak while foreign demand is stable. The resilience of plates supports hot - rolled coil demand, while the demand for construction steel weakens significantly with the season. It is expected that the demand trend will continue in January. - Overall, in the next month, the steel market fundamentals will remain weak. Before the Spring Festival, supply will stay low, demand will further weaken seasonally in January, and inventory will enter an accumulation cycle. Macroeconomic policies seek progress while maintaining stability, providing bottom - line support, but weak domestic demand caused by the decline in real estate investment and negative growth in fixed - asset investment persists, while manufacturing resilience supports plate demand. On the cost side, supply disruptions have reappeared, and the strong performance of coking coal and coke futures has driven a rebound in the black commodity sector. Overall, in the game between reality and expectations, steel prices are expected to maintain a volatile pattern, with the reference range for rebar at 3000 - 3350 yuan/ton [47][48].

Group 1 - The core viewpoint of the article is that the Chinese steel market is expected to face a relatively abundant supply in 2025, despite various influencing factors on production and demand [1][2][3] Group 2 - From January to April 2023, China's crude steel production showed steady growth, while the supply of crude steel resources declined, and steel production and resource supply increased significantly [1] - The steel export volume remains high, but there are concerns about potential declines due to improved export documentation requirements and anti-dumping measures abroad [2] - The issuance of special bonds has slightly accelerated compared to the previous year, but the total investment in new local projects has significantly decreased [2] - The steel industry is expected to face high cost pressures in 2025, with iron ore supply improving due to weakened domestic demand and increased overseas supply [2] - The government has implemented macro-control policies to mitigate the impact of U.S. tariffs, including a joint statement to significantly reduce bilateral tariffs [2] Group 3 - The domestic steel consumption is projected to decrease by approximately 30 million tons in 2025 compared to 2024, with steel exports potentially reducing by 15 to 25 million tons [3] - If crude steel production can be controlled at 950 million tons for the year, a reduction of about 5 million tons from the previous year, the domestic steel market supply and demand may achieve basic balance [3] - Domestic steel prices are currently at a global low, with a slight rebound expected after the second quarter, but facing severe challenges in the third quarter [3] - The average price for the year is expected to drop by about 300 yuan per ton compared to 2024, with ordinary steel prices likely fluctuating below the industry average cost line [3] - Key factors to monitor include the progress of China-U.S. trade talks, changes in international geopolitical conflicts, steel industry policies, foreign trade export conditions, and fluctuations in commodity prices [3]