Core Viewpoint - The steel industry is experiencing a recovery in profits due to unexpected demand from manufacturing and direct exports, alongside the implementation of "anti-involution" policies, leading to an increase in supply optimization expectations [1][2]. Group 1: Industry Performance - In Q1-Q3 2025, the SW steel index rose by 24.00%, ranking 17th among Shenwan industries, driven by improved manufacturing and export demand [1][2]. - From October 2025 to present, the SW steel index has continued to rise by 14.19%, ranking 4th among Shenwan industries [1][2]. - In Q3 2025, the profitability of the rebar sector turned positive, with a 102.59% increase in special steel profits year-on-year, while the gross profit margin rose to 7.59% and net profit margin increased to 2.19% [3]. Group 2: Policy and Structural Changes - The steel industry is focusing on differentiated production restrictions and classified management to promote high-value, low-carbon, and intelligent transformations, enhancing industry concentration and optimizing structural layout [3]. - Policies such as ultra-low emission upgrades and dual control of energy consumption are expected to drive capacity optimization and accelerate the elimination of outdated production capacity [3]. Group 3: Demand Drivers - The manufacturing sector, particularly in machine tools, excavators, and commercial vehicles, remains resilient, with direct exports showing significant year-on-year growth, supporting steel demand [3]. - The construction sector is experiencing weak new starts, but forward-looking indicators like sales and land acquisition are showing reduced declines, stabilizing demand for construction steel [3]. Group 4: Investment Recommendations - Steel capacity optimization is expected to be a key focus moving forward, with a push for differentiated management to support competitive enterprises [4]. - Attention is recommended for leading steel companies such as Hualing Steel, Baosteel, and Nanjing Steel, as well as flexible stocks like Fangda Special Steel and New Steel [4]. - The special steel sector is projected to benefit from downstream demand in automotive, nuclear power, and oil and gas extraction, with companies like Xianglou New Materials and Jiuli Special Materials highlighted for stable growth [4]. - In the raw materials sector, companies with clear non-ferrous resource increments, such as Dazhong Mining and Hebei Steel Resources, are recommended for investment [4].

Core Viewpoint - The steel sector is experiencing strong performance in the first three quarters of 2025, driven by the "anti-involution" policy, supply optimization, and robust demand from manufacturing and direct exports, leading to a year-on-year profit recovery and significant stock price increases [1][2]. Group 1: Steel Sector Performance - In Q1-Q3 2025, the steel industry saw a 24% increase in the SW steel index, ranking 17th among all industries in the Shenwan classification [1]. - From October 2025 to the present, the SW steel index has risen by 14.19%, ranking 4th among Shenwan industries [1][2]. - In Q3 2025, the net profit of the general steel sector turned positive, while special steel profits grew by 102.59% year-on-year [2]. Group 2: Policy and Market Dynamics - The introduction of differentiated production restrictions aims to promote high-value-added, low-carbon, and intelligent transformations in the steel industry, enhancing industry concentration and optimizing structural layout [3]. - Manufacturing sectors such as machine tools, excavators, and commercial vehicles remain resilient, with direct exports showing significant year-on-year growth, supporting steel demand [4]. Group 3: Investment Recommendations - The optimization of steel production capacity is expected to be a key investment theme, focusing on supporting superior companies and implementing differentiated management [5]. - Key steel leaders such as Hualing Steel, Baosteel, and Nanjing Steel are recommended for their advantages in capacity standardization and green transformation [5]. - In the special steel sector, companies benefiting from downstream industries like automotive and nuclear power are highlighted for their growth potential [5]. Group 4: Raw Material Sector - Companies with clear incremental non-ferrous resources, such as Dazhong Mining and Hebei Steel Resources, are recommended due to their diversified resource strategies [6].

Core Viewpoint - The steel industry is experiencing a weak recovery in demand and a significant drop in raw material prices, leading to a profit recovery for steel companies. The SW Steel index has increased by 3.82% in H1 2025 and by 15.62% since July 2025, reflecting improved profit expectations due to supply optimization policies [1][2]. Group 1: Market Performance - In H1 2025, the steel sector saw a weak recovery in demand, with raw material prices declining more than steel prices, resulting in a profit recovery for steel companies. The SW Steel index rose by 3.82%, ranking 23rd among Shenwan industries [2]. - From July 2025 to present, the introduction of "anti-involution" policies has enhanced expectations for supply optimization in the steel industry, leading to a recovery in steel prices and a 15.62% increase in the SW Steel index, ranking 13th among Shenwan industries [1][2]. - In Q2 2025, the profitability of the rebar sector improved both year-on-year and quarter-on-quarter, with a 1831.92% increase in net profit for rebar companies year-on-year and a 104.89% increase quarter-on-quarter [2]. Group 2: Industry Trends - The steel sector's configuration ratio decreased in Q2 2025 due to the lack of implementation of crude steel production limits and the impact of U.S. tariffs on demand expectations, dropping by 0.20 percentage points to 0.22% [3]. - The domestic crude steel surplus has exceeded previous cycles, and policies aimed at optimizing steel production capacity are expected to improve the supply structure [3]. - Manufacturing sectors such as machine tools, excavators, and passenger vehicles remain robust, while direct exports have increased significantly, supporting steel demand. The construction sector shows signs of stabilization despite weak new starts [3]. Group 3: Investment Recommendations - The optimization of steel production capacity is expected to be a key focus moving forward, with a shift towards differentiated management and support for high-quality enterprises [4]. - For the rebar sector, attention should be paid to leading companies like Hualing Steel, Baosteel, and Nanjing Steel, which are expected to benefit from policy support and improved profitability [5]. - In the special steel sector, companies benefiting from downstream demand in automotive, wind power, and oil and gas extraction are recommended for investment, with a focus on firms like Xianglou New Materials and Jiuli Special Materials [5].

Core Viewpoint - Long-term optimization of steel production capacity will be a key focus, emphasizing the elimination of inefficiencies through differentiated management and classification [1] Group 1: General Steel Sector - The 2025 version of the steel industry standards establishes a comprehensive evaluation system for steel enterprises, which may serve as a crucial tool for differentiated management [1] - Attention is drawn to leading steel companies and those with elastic production capabilities, as they are expected to benefit from policy support aimed at capacity standardization, high-end production, and green initiatives [1] - Recommended companies include industry leaders such as Hualing Steel, Baosteel, and Nanjing Steel, along with companies like Fangda Special Steel, New Steel, Shandong Steel, and Sansteel Mingguang, which are expected to show performance recovery and production elasticity [1] Group 2: Special Steel Sector - The special steel sector is anticipated to benefit from the growth in downstream industries such as automotive, wind energy, and oil and gas extraction, indicating a promising consumption outlook for special steel [1] - Ongoing projects in certain special steel companies are progressing steadily, suggesting stable growth in performance [1] - Recommended companies in this sector include Xianglou New Materials and Jiuli Special Materials, which are expected to capitalize on these trends [1]

Investment Rating - The steel industry is rated positively with a recommendation for leading companies and flexible targets in both the ordinary and special steel sectors [4][4][4]. Core Insights - The steel sector experienced a recovery in profits, with the SW Steel index rising by 3.82% in H1 2025 and 15.62% from July to now, indicating a positive trend in the industry [1][9][11]. - The profitability of the ordinary steel sector saw a significant year-on-year increase of 1831.92% in Q2 2025, while special steel experienced a slight decrease of 2.72% [2][16]. - The report highlights the ongoing optimization of steel production capacity, driven by policies aimed at reducing overcapacity and improving environmental standards [3][4][55]. Summary by Sections Steel Sector Performance - In H1 2025, the steel sector's performance was weaker than the Shanghai Composite Index, but improved significantly from July onwards, aligning closely with the index [11][12]. - The ordinary steel sector showed a 4.47% increase in H1 2025 and a 17.63% increase from July to now, while special steel increased by 5.03% and 10.41% respectively [12][13]. Financial Metrics - The steel sector's total revenue in H1 2025 was 945.53 billion, down 9.16% year-on-year, while net profit increased by 157.66% to 13.14 billion [16][16]. - The gross profit margin improved to 7.47% in Q2 2025, with a net profit margin of 1.89% [19][19]. Investment Recommendations - The report suggests focusing on leading companies in the ordinary steel sector, such as Hualing Steel and Baosteel, which are expected to benefit from policy support and improved profitability [4][4][4]. - For the special steel sector, companies benefiting from downstream demand in automotive and renewable energy sectors are recommended, including Xianglou New Materials and Jiuli Special Materials [4][4][4]. Market Trends - The report notes that manufacturing and direct exports are supporting steel demand, while the construction sector remains weak but shows signs of stabilization [3][4]. - The steel industry is expected to undergo significant capacity optimization, with new regulations promoting high-value, low-carbon production methods [55][55].

Investment Rating - The report maintains a "Buy" recommendation for several steel companies, including Baosteel, Hualing Steel, and Nanjing Steel, among others [3][4]. Core Viewpoints - The upcoming "stability growth plan" from the Ministry of Industry and Information Technology is expected to optimize steel production capacity, focusing on structural adjustments and the elimination of outdated capacity [3][7]. - Steel prices have shown an upward trend, with specific prices for various steel products increasing as of July 18, 2025 [1][10]. - The report indicates a decrease in steel production and inventory levels, with a total production of 8.68 million tons for the five major steel products, reflecting a week-on-week decrease [2][8]. Summary by Sections Price Trends - As of July 18, 2025, the price of 20mm HRB400 rebar in Shanghai is 3,270 CNY/ton, up 30 CNY/ton from the previous week [1][10]. - Other steel products also saw price increases, including hot-rolled and cold-rolled steel [1][11]. Production and Inventory - The total production of the five major steel products is 8.68 million tons, down 45,300 tons week-on-week [2][8]. - Social inventory of the five major steel products increased by 81,500 tons to 9.21 million tons, while steel mill inventory decreased by 100,200 tons [2][8]. Profitability - The report notes fluctuations in steel profitability, with rebar, hot-rolled, and cold-rolled steel margins changing by -19 CNY/ton, -7 CNY/ton, and +7 CNY/ton respectively [1][3]. Investment Recommendations - The report recommends several companies for investment, including Baosteel, Hualing Steel, and Nanjing Steel in the flat steel sector, and Xianglou New Materials and CITIC Special Steel in the special steel sector [3][4].