Core Viewpoint - The steel industry, characterized by large asset scale, strong competitiveness, and weak profitability, is a key focus for "anti-involution" policies aimed at addressing overcapacity [1] Group 1: Supply-Side Policies - The "anti-involution" policy in the steel industry is expected to continue with "capacity + output control" to resolve the total supply-demand structural contradictions [1] - The "Steel Industry Stable Growth Work Plan (2025-2026)" has clearer requirements for controlling total supply compared to the 2023 version, aiming for supply contraction and the exit of outdated capacity [1] - Future policies will provide support in carbon management and classification ratings among enterprises, facilitating the implementation of these policies [1] - Ongoing issues such as "unauthorized and capacity-replacement new steelmaking capacity" and "illegal construction of steel projects" are still present, warranting attention to future developments [1] Group 2: Cost and Profitability - In the first half of the year, steel companies benefited from declining raw material prices, resulting in higher profit margins and stability compared to previous years [2] - The production of the Ximangdu iron ore mine is expected to lead to a more relaxed supply of iron ore, which may benefit the steel industry [2] - Although steel prices may decrease with falling costs, a reduction in steel production and improved supply-demand dynamics could allow profits from the iron ore segment to shift towards steel and downstream industries [2] - According to Changjiang Securities, the profit distribution in the steel industry chain for the first eight months of 2025 shows iron ore, coking coal, and finished products accounting for 72%, 7%, and 22% of profits, respectively, indicating a larger space for iron ore to provide benefits compared to coking coal [2] - Under the "anti-involution" backdrop, leading companies are expected to benefit in the medium to long term, as they require reasonable profits to support R&D intensity [2] - The logic of "profit growth → continuous R&D → product enhancement → profit margin improvement" is anticipated for these leading companies [2] - Leading companies have a higher direct supply ratio to downstream, enhancing profit stability and exhibiting characteristics of quasi-rent assets [2] - Investors are advised to pay attention to the steel ETF (515210) [2]