According to the report released by China Galaxy Securities, the operating rate of steel mills slightly rebounded in November, and the enthusiasm for resuming production continued to improve; influenced by positive policies, market demand has seen some uplift. By sector, infrastructure construction investment (excluding electricity) increased by 4.30% year-on-year; real estate investment decreased by 10.60% year-on-year; manufacturing investment increased by 9.30% year-on-year. The decline in real estate prices and sales has shown signs of stabilizing; manufacturing investment is mainly affected by profit pressures, and the restrictive effect of a low price environment on investment still exists. At the end of the year, the &#34;two 重&#34; and &#34;two 新&#34; policies and the recovery of profits in the consumer goods manufacturing industry are expected to support the resilience of manufacturing investment.
<h2>The main viewpoints of China Galaxy Securities are as follows:</h2>
Overview of steel volume and price data:
In terms of price, steel prices were weakly fluctuating in November. The comprehensive index of Chinese steel was 97.95, down 3.57 from the previous month, a decline of 3.52%. In November, as the weather turned colder, construction activities were somewhat restricted, and the speed of demand release for downstream products in the market slowed down, leading to a weak fluctuation in steel prices.
In terms of production, the operating rate of steel mills slightly rebounded in November. In terms of output, in November 2024, domestic crude steel, pig iron, and steel output were 78.4 million tons, 67.48 million tons, and 118.81 million tons, respectively, representing year-on-year increases of 2.50%, 3.90%, and 5.10%. The net export volume in November fell back, with domestic net steel exports at 8.81 million tons, a decrease of 1.83 million tons compared to the previous month.
Analysis of the steel supply and demand industry chain:
From the supply side, the operating rate of steel mills slightly rebounded in November, and the enthusiasm for resuming production continued to improve. In November 2024, the average operating rate of domestic blast furnaces was 82.18%, an increase of 1.67 percentage points month-on-month and 1.49 percentage points year-on-year. From the demand side, market demand has seen some uplift in November due to positive policy influences. The apparent consumption of domestic steel in November was 110 million tons, an increase of 6.75% year-on-year. Among different types of steel, the apparent consumption of domestic rebar, cold-rolled sheets, hot-rolled sheets, wire rods, and medium plates in October was 17.418 million tons (an increase of 16.24% month-on-month), 3.204 million tons (an increase of 5.59% month-on-month), 10.515 million tons (an increase of 0.45% month-on-month), 11.377 million tons (an increase of 3.72% month-on-month), and 6.807 million tons (an increase of 23.82% month-on-month).
From the upstream perspective, with the rise in raw material prices, the profitability of steel companies is declining, approaching historical lows. According to the latest data from the National Bureau of Statistics, the industrial added value of enterprises above designated size in October increased by 5.40% year-on-year, an increase of 0.10 percentage points from the previous month. The domestic manufacturing PMI index was 50.3%, remaining in the expansion range for two consecutive months, indicating that the economy is showing initial signs of stabilization. From January to November, the total fixed asset investment (excluding rural households) in the country reached 46.6 trillion yuan, with a year-on-year increase of 3.30%, and the growth rate fell by 0.1 percentage points compared to the previous month
By sector, infrastructure construction investment (excluding electricity) has a cumulative year-on-year increase of +4.30%; real estate investment has a cumulative year-on-year decrease of -10.60%; manufacturing investment has a cumulative year-on-year increase of +9.30%. The decline in real estate prices and sales has shown initial signs of stabilization; manufacturing investment is mainly affected by profit pressures, and the restrictive effect of a low price environment on investment still exists. At the end of the year, the &#34;two 重&#34; and &#34;two 新&#34; policies and the recovery of profits in the consumer goods manufacturing industry are expected to support the resilience of manufacturing investment.
Investment Suggestions:
The Central Economic Work Conference pointed out the implementation of a series of incremental policies to stabilize the real estate market. The outlook for black metals is positive, and the fundamentals of the steel industry are expected to remain stable. With the positive impact of policies, downstream demand is expected to grow. Currently, steel demand is transitioning from real estate to high-end manufacturing, and domestic manufacturing is expected to continue its transformation and upgrading. Steel mills are expected to resume production, and there is rigid support for steel demand from the manufacturing sector. Infrastructure demand is expected to be released in a concentrated manner, and export demand shows resilience, with total demand for the year expected to stabilize and rebound. As the process of manufacturing transformation and upgrading accelerates, steel demand in high-end manufacturing industries is expected to improve marginally. Additionally, benefiting from the development of downstream aerospace, automotive manufacturing, and other fields, the consumption prospects for special steel are good, and special steel companies are expected to achieve stable growth.
In terms of targets, it is recommended to pay attention to: leading companies in the ordinary steel sector that benefit from policy expectations leading to marginal improvements in demand, and leading companies in the special steel sector with good fundamentals.
Risk Warning: Risks of downstream real estate and infrastructure demand falling short of expectations; uncertainties in the prices of raw materials such as iron ore and coal; risks of significant changes in steel industry policies, etc

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China Galaxy Securities released a research report stating that in November, the operating rate of steel mills slightly rebounded, and the enthusiasm for resumption of production improved, with market demand boosted by policies. Infrastructure construction investment increased by 4.30% year-on-year, real estate investment decreased by 10.60%, and manufacturing investment grew by 9.30%. In November, steel prices fluctuated weakly, with the comprehensive steel index at 97.95, down 3.57% from the previous month. It is expected that year-end policies and the recovery of profits in the consumer goods manufacturing industry will support the resilience of manufacturing investment

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China Galaxy Securities: Supply and demand rebounded in November, and steel for manufacturing is expected to maintain high prosperity