GTHT has released a research report maintaining an "overweight" rating on the steel industry, with expectations of supply-side contraction and a gradual recovery in fundamentals. In the long term, increasing industry concentration and promoting high-quality development are inevitable trends for the steel sector. Companies with advantages in product structure and cost efficiency will benefit significantly. Under stricter environmental policies, ultra-low emission upgrades, and carbon neutrality goals, leading firms will see more pronounced competitive edges and profitability.
Key insights from GTHT are as follows:
**Demand Declines Sequentially, Inventory Continues to Drop** Last week (December 15–19, 2025), apparent consumption of five major steel products totaled 8.35 million tons, down 0.53% sequentially and 4.06% year-on-year. Among these, construction steel consumption rose by 68,400 tons to 2.895 million tons, while sheet steel consumption fell by 112,800 tons to 5.458 million tons. Output of the five major products declined 1.02% sequentially to 7.98 million tons, with total inventory dropping 2.8% to 12.95 million tons, remaining at low levels.
According to Mysteel data, the blast furnace operating rate at 247 steel mills nationwide stood at 78.47%, down 0.16 percentage points week-over-week, while capacity utilization fell 1 percentage point to 84.93%. Inventory levels continued to decline.
**Profitability Declines Sequentially** Iron ore inventories at 45 ports increased by 810,000 tons to 155.13 million tons, the highest since March 25, 2022. The average simulated profit margin for rebar rose by 54 yuan per ton to 206 yuan, while hot-rolled coil margins improved by 36 yuan per ton to 8 yuan. The profitability rate among 247 steel mills remained flat at 35.93%.
As China's pig iron output declines, demand for iron ore may slow. In November 2025, China's crude steel output fell 10.9% year-on-year to 69.87 million tons, pig iron output dropped 8.7% to 62.34 million tons, and finished steel output decreased 2.6% to 115.91 million tons. From January to November 2025, crude steel output declined 4.0% year-on-year to 891.67 million tons, pig iron output fell 2.3% to 774.05 million tons, while finished steel output rose 4.0% to 1.33277 billion tons.
**Demand Expected to Stabilize, Supply Contraction Outlook Maintained** With the real estate downturn, steel demand from the property sector continues to shrink, but GTHT expects the negative drag on steel demand to weaken significantly. Meanwhile, demand from infrastructure and manufacturing is projected to grow steadily.
On the supply side, about 65% of steel companies remain unprofitable, signaling the start of market-driven supply adjustments. GTHT maintains its expectation of supply-side contraction, anticipating a gradual recovery in steel fundamentals.
**Risk Warning:** Supply contraction may fall short of expectations, and demand could decline sharply.
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