According to the Zhitong Finance APP, Guotai Junan released a research report stating that last Friday, the apparent consumption of the five major steel varieties was 8.7541 million tons, an increase of 1.2398 million tons week-on-week; among them, the apparent consumption of construction materials was 3.0417 million tons, an increase of 815,500 tons week-on-week; the apparent consumption of sheet materials was 5.7124 million tons, an increase of 424,300 tons week-on-week. The output of the five major steel varieties was 8.5695 million tons, a decrease of 63,600 tons week-on-week; total inventory was 15.8226 million tons, a decrease of 184,600 tons week-on-week, maintaining a low level. Current steel demand is expected to gradually bottom out; even without considering supply policies, the industry has been in a loss for a long time, and the market-oriented clearing of supply has begun to appear, indicating that the fundamentals of the steel industry are expected to gradually recover. If supply policies are implemented, the contraction speed of industry supply will be faster, and the industry's upward progress will unfold more quickly.
<h2>Guotai Junan's main viewpoints are as follows:</h2>
Demand increased week-on-week, inventory decreased week-on-week
Last week (the &#34;last week&#34; in this report refers to the week from October 13 to October 17, 2025), the apparent consumption of the five major steel varieties was 8.7541 million tons, an increase of 1.2398 million tons week-on-week; among them, the apparent consumption of construction materials was 3.0417 million tons, an increase of 815,500 tons week-on-week; the apparent consumption of sheet materials was 5.7124 million tons, an increase of 424,300 tons week-on-week. The output of the five major steel varieties was 8.5695 million tons, a decrease of 63,600 tons week-on-week; total inventory was 15.8226 million tons, a decrease of 184,600 tons week-on-week, maintaining a low level. Last week, the operating rate of blast furnaces in 247 steel mills was 84.27%, unchanged week-on-week; the capacity utilization rate of blast furnaces was 90.33%, a decrease of 0.22 percentage points week-on-week; the operating rate of electric furnaces was 60.9%, an increase of 0.64 percentage points week-on-week; the capacity utilization rate of electric furnaces was 52.5%, an increase of 0.47 percentage points week-on-week. After the holiday, demand has resumed growth, and inventory has returned to a downward trend.
Profitability decreased week-on-week
Last week, the inventory of imported iron ore in Hong Kong was 142.78 million tons, an increase of 2.53 million tons week-on-week. Last week, the simulated average gross profit of rebar was 111.6 yuan/ton, a decrease of 34.3 yuan/ton week-on-week; the simulated average gross profit of hot-rolled coils was 21.6 yuan/ton, a decrease of 67.6 yuan/ton week-on-week; the profitability of 247 steel companies was 55.41%, a decrease of 0.87% week-on-week. Looking ahead, it is expected that iron ore production will accelerate and demand will not see significant improvement, leading iron ore to gradually enter a loose cycle, with limited upward elasticity in iron ore prices. The cost constraints in the steel industry are expected to gradually improve, and the industry's profitability center is expected to gradually recover.
Demand is expected to stabilize, supply maintains contraction expectations
The continuous decline in real estate has led to a decrease in the proportion of demand from the real estate sector, and it is expected that the negative drag of real estate on steel demand will weaken; demand for steel from infrastructure and manufacturing is expected to grow steadily. In terms of exports, the steel export volume from January to August still maintained year-on-year growth. Overall, it is expected that steel demand will gradually stabilize. On the supply side, the industry has been in loss since Q3 2022, and nearly 40% of steel companies are still in loss, with market-oriented clearing of supply beginning to appear. On the policy front, the recently released &#34;Steel Industry Stabilization and Growth Work Plan (2025-2026)&#34; proposed to &#34;continue to implement the production reduction policy, fulfill annual production control tasks according to the principle of supporting the development of advanced enterprises and forcing the exit of backward and inefficient production capacity, and promote dynamic balance between supply and demand.&#34;
Maintaining expectations for supply-side contraction, the fundamentals of the steel industry are expected to gradually recover.
Maintain &#34;Overweight&#34; rating
In the long term, the improvement of industry concentration and the promotion of high-quality development are inevitable trends for the future development of the steel industry. Steel companies with product structure and cost advantages will fully benefit; under the backdrop of stricter environmental protection, ultra-low emission transformation, and carbon neutrality, the competitive advantages and profitability of leading companies will become more prominent.
In terms of targets, key recommendations include
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Baosteel (600019.SH), which leads in technology and product structure; Valin Steel (000932.SZ) and Shougang (000959.SZ), which are continuously upgrading their product structures; Fangda Special Steel (600507.SH) and Xinxing Steel (600782.SH), which have low costs and flexibility.
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Citic Special Steel (000708.SZ) and Yongjin Co., Ltd. (603995.SH), which have competitive advantages with low valuations and high dividends; high-barrier material companies Jiuli Special Materials (002318.SZ), Xianglou New Materials (301160.SZ), and Boke New Materials (300811.SZ); leading high-temperature alloy company Tunan Co., Ltd. (300855.SZ) and Fushun Special Steel (600399.SH).
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With the trend of demand recovery, we are optimistic about upstream resource products with long-term structural advantages, recommending Hebei Steel Resources (000923.SZ), Dazhong Mining (001203.SZ), Anning Co., Ltd. (002978.SZ), Ordos (600295.SH), Yongxing Materials (002756.SZ), and Baogang Co., Ltd. (600010.SH).
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Risk Warning
Supply-side contraction may be less than expected, and demand may decline significantly

600019

000959

000932

CITIC Securities released a research report indicating that steel demand is gradually recovering after the holiday, with a significant downward trend in inventory. Last Friday, the apparent consumption of major steel varieties was 8.7541 million tons, an increase of 1.2398 million tons compared to the previous period, with a production of 8.5695 million tons, a decrease of 0.0636 million tons compared to the previous period, and a total inventory of 15.8226 million tons, a decrease of 0.1846 million tons compared to the previous period. Although the industry has been experiencing losses for a long time, the market-oriented clearing of supply has begun, and it is expected that the fundamentals of the steel industry will gradually improve

Cathay Securities and Haitong Securities: Steel demand recovers and grows after the holiday, inventory returns to a downward trend