A freight recession stretching back to 2022 has kept the trucking industry under prolonged pressure, forcing carriers to navigate weak volumes as they look to late-2025 trends for evidence that the downturn is easing. Last year, trucking activity by tonnage moved rose just 0.1 percent over the 2024 average, according to the American Trucking Associations’ seasonally adjusted For-Hire Truck Tonnage Index. The paltry increase represents the first annual gain for the index since 2022, and was pushed forward ...

Investment Rating - The report indicates a positive outlook for the steel and cement sectors in China, suggesting potential benefits from a more supportive policy environment on supply discipline [1][12][13]. Core Insights - There is a renewed policy focus on addressing supply discipline in China, with a call for a unified national market and a crackdown on excessive competition leading to lower prices [1]. - The report highlights that excess capacity in various industries ranges from 30% to 50%, with specific figures for steel and cement being around 30% to 50% [2][11]. - The potential for executing production cuts in the steel sector is noted, with a target of 50 million tons, which could lead to a significant reduction in crude steel output in the second half of 2025 [13][18]. - The cement sector is also undergoing capacity categorization and is targeting a reduction of unauthorized and energy-intensive capacities, which could improve capacity utilization from 50% to 70% [13][14]. Summary by Sections Supply Side Expectations - The report discusses ongoing policy efforts to discourage overly fierce competition and control output in sectors like hog farming and steel, aiming to reverse price deflation trends [12]. - The clarity of future policy guidance remains uncertain, but discussions suggest a more supportive context for executing supply plans in the steel and cement sectors [13]. Excess Capacity Analysis - Excess capacity is a persistent challenge, with estimates indicating that unauthorized excess clinker capacity in the cement industry exceeds 400 million tons, representing nearly 18% of the industry [14][15]. - The report estimates that additional requirements could lead to a targeted exit of 277 to 377 million tons of clinker capacity, further reducing excess capacity [13]. Market Impact - The report anticipates that the execution of steel production cuts could create a meaningful deficit in the market, similar to conditions observed in the second half of 2021, which previously led to margin expansion and reduced exports [18][19]. - The implied spread from rebar futures suggests a potential margin expansion of nearly RMB 200 per ton in the steel sector, indicating a strong possibility of production cuts [16].