Investment Rating - The industry investment rating is Neutral, maintained [7]. Core Viewpoints - The steel industry is transitioning from valuation recovery to fundamental recovery, with the purchase and sale price difference being a key tracking clue [4]. - The expectation of production restrictions is driving black commodity prices to gradually strengthen since early April, which is favorable for the expansion of steel material purchase and sale price differences [4][7]. - The price of steel has been under pressure due to tariff and anti-dumping policies, leading to a decline in steel prices before the May Day holiday [4]. Summary by Relevant Sections Price Trends - From early April to now, the average prices of iron ore, metallurgical coke, rebar, and hot-rolled steel have decreased by 26, 72, 138, and 136 CNY/ton respectively [2]. - The purchase and sale price differences for rebar and hot-rolled steel have narrowed by 43 and 41 CNY/ton compared to the first quarter [2][7]. Production and Demand - The demand for construction steel has slightly declined as the pre-holiday replenishment effect weakens, with average daily transaction volumes for construction steel at 109,300 tons, down from the previous week [4]. - The average daily pig iron production of sample steel companies has risen to 2.4542 million tons, an increase of 10,700 tons compared to the previous period [4]. Inventory and Profitability - The total inventory of long products has decreased by 21.65% year-on-year, while plate inventory has decreased by 14.87% year-on-year [4]. - The estimated profit for rebar is 19 CNY/ton, while the profit based on lagging costs is 5 CNY/ton [4]. Future Outlook - In the second quarter of 2025, the purchase and sale price differences for steel are expected to expand due to the decline in long-term contract prices for coke and the expectation of production restrictions [5][7]. - The purchase and sale price differences for rebar and hot-rolled steel are projected to expand by 62 and 63 CNY/ton respectively if all steel companies adopt long-term contracts [7]. Investment Opportunities - The report suggests focusing on undervalued quality companies in the steel sector, such as Baosteel and Nanjing Steel, as well as companies with strong performance potential like Hualing Steel and New Steel [25].