--- title: "CICC: Production control improves industry structure, reiterates positive outlook on the steel sector market" type: "News" locale: "en" url: "https://longbridge.com/en/news/230939680.md" description: "CICC released a research report stating that the National Development and Reform Commission will continue to implement crude steel production regulation to promote the reduction and restructuring of the steel industry, believing that the steel industry will improve. Although the industry's profits are expected to decline significantly in 2024 and face fierce competition and trade friction, demand has shown signs of recovery since February, with finished product prices performing better than iron ore prices. CICC reiterates its positive outlook on the steel sector, recommending companies such as Maanshan Steel, xinsteel, Valin Steel, and Baosteel" datetime: "2025-03-07T06:38:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/230939680.md) - [en](https://longbridge.com/en/news/230939680.md) - [zh-HK](https://longbridge.com/zh-HK/news/230939680.md) generator: "portal-rs" --- # CICC: Production control improves industry structure, reiterates positive outlook on the steel sector market According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that recently, the official WeChat account of the National Development and Reform Commission (NDRC) promoted the "Task List for China's Economic and Social Development in 2025," which includes "continuing to implement crude steel production control and promoting the reduction and restructuring of the steel industry" as one of the tasks to promote the transformation and upgrading of traditional industries. This is the first mention of this since the industry entered a downward cycle in 2021. Compared to the production control in 2021, the reduction in 2025 may be greater, but demand will not match that of 2021. Overall, steel companies with strong performance elasticity are recommended, with a focus on Maanshan Iron & Steel Company Limited (00323), and attention to Xinsteel (600782.SH). In the long term, core assets will benefit from changes in the industry landscape, with a strong recommendation for Valin Steel (000932.SZ) and Baosteel (600019.SH). ## CICC's main viewpoints are as follows: **The industry is at the historical cycle bottom and is beginning to show positive marginal changes** 1. Since the second half of 2021, industry profits have significantly declined, falling to a historical low in the third quarter of 2024, with total profits of key enterprises down nearly 50% year-on-year, and an average sales profit margin of 0.71%. Loss-making enterprises are expected to accumulate losses exceeding 120 billion yuan in 2024, while the industry has not yet cleared, with production capacity reaching nearly 1.3 billion tons and a capacity utilization rate of 77%. Homogenization and intense competition within the industry persist; 2) During the downward cycle, the industry's acceptable inventory level continues to decline, with the inventory cycle hitting bottom; 3) Financial leverage is rising, and debt repayment capacity is declining, with the industry's asset-liability ratio at 65.28% in 2024 (vs. 60.22% in 2021). 2. Trade frictions are gradually intensifying, putting downward pressure on exports; 5) Some leading steel companies still have excess profits despite significant losses in the industry, but their valuations are below net asset value, with the price-to-book ratio around the 25th percentile of the past five years. 6) Since February, demand in the industry has shown marginal recovery, with manufacturing stronger than construction; 7) The price of finished materials has recently outperformed iron ore prices, and profitability is beginning to improve. **Reaffirming the bullish core logic** 1. The sector currently has a low-profit, low-valuation, and low-allocation "three lows" pattern, with potential returns from "high cutting low"; 2) The catalyst is the implementation of production control; 3) Against a backdrop of low inventory, production control is expected to improve the oversupply situation and the erosion of profits by raw materials, making a recovery in the profitability cycle worth looking forward to, with fundamental support; 4) The government's determination to resolve excess steel production capacity and address industrial contradictions is evident, with clear goals. In the long term, continuous production control and differentiated management will accelerate industry clearing and concentration towards leading enterprises, providing a long-term investment logic that outweighs short-term fundamental changes. From a timing perspective, the current position of the sector is still low enough, with marginal improvements in fundamentals, and expectations for supply-side reductions just beginning to form, making it important to pay attention to opportunities in the steel sector. **Risk factors** Demand from the construction industry chain is significantly lower than expected; exports decline beyond expectations ### Related Stocks - [600019.CN](https://longbridge.com/en/quote/600019.CN.md) - [600782.CN](https://longbridge.com/en/quote/600782.CN.md) - [000932.CN](https://longbridge.com/en/quote/000932.CN.md) - [00323.HK](https://longbridge.com/en/quote/00323.HK.md) ## Related News & Research - [Krakatau Steel announces extraordinary shareholders meeting](https://longbridge.com/en/news/296799459.md) - [Usiminas says controlling shareholder Ternium denies talks to take steelmaker private](https://longbridge.com/en/news/296912049.md) - [Hunan Valin Steel: Net profit fell 87% on lower revenue and higher costs, but high-end product sales and exports grew](https://longbridge.com/en/news/296612874.md) - [BUZZ-Brazil's Usiminas jumps after report Ternium aims to take it private](https://longbridge.com/en/news/296801697.md) - [03:12 ETOmdia H1 2026: Hisense Ranks No. 1 Globally in 100-Inch-and-Above TV Shipments](https://longbridge.com/en/news/297138716.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**