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Industry Weekly Report Summary: China's Steel Sector

Date: November 9, 2025
Coverage: China's Steel Industry

Market Overview

This week, the CSIndex for steel closed at 1,983.29 points, an increase of 4.57%. The steel sector outperformed the CSI 300 Index, which rose by 0.82%. Among the 30 CSI first-level indices, the steel sector ranked second based on weekly performance.

Key Market Analysis

1. Production:

   • The average daily iron water production decreased by 2.1 million tons to 234.2 million tons, indicating a decline in long-process steel output.
   • Phosphating production and thermal coil production also saw weekly declines.

2. Inventory:

   • Overall steel inventory decreased by 0.7%, narrowing the week-over-week decline compared to the previous week.
   • Total social inventory rose by 29.8% year-on-year, while the steel mills' inventory increased by 5.3% year-on-year.

3. Demand:

   • Aggregate steel consumption decreased by 5.4% week-over-week and 2.8% year-on-year.
   • Building steel demand fell by 5.9% week-over-week and 9.2% year-on-year.

4. Raw Materials:

   • Iron ore prices fell by 5.0% week-over-week.
   • The benchmark price for coking coal increased slightly.

5. Prices and Margins:

   • Current margins for long and hot-rolled coils firmed slightly, with thermal coil prices falling by 1.8% week-over-week.
   • Short-process steel short-term margins showed improvement, while long-process steel margins remained under pressure.

Investment Strategy

• The steel sector remains undervalued, offering strong safety margins. We recommend focusing on companies with low valuations, such as Huah Steel, Nansteel Co., and Bao Steel.
• Highlights include Urgang Tubular Pipe, Nxunsteel, Wujin不锈, and Yinggang Co. based on their exposure to growth in power generation, oil and gas, and other industrial trends.
• Supportive policies for rectifying industry production capacity are expected to further stabilize the steel sector.

Demand and Supply Dynamics

• Steel Exports: China's steel exports remained strong, with imports declining and prices stabilizing.
• Capacity Restructuring: Announced policies on steel capacity reduction are expected to improve the sector's long-term fundamentals.

Key Pointers for 2025

• Production and export figures indicate that the steel industry will continue to benefit from global demand and domestic policy support.
• Cyclical factors (inventory, production, demand) must be monitored closely to identify opportunities in valuation-sensitive companies.

Key Risk Factors

• Unexpected changes in domestic production and export volumes.
• Lower-than-expected industrial demand.
• Volatility in raw material prices.

Summary

The steel sector showed resilience in November, defying broader market fluctuations. While production and inventory levels indicate structural shifts, demand remains a key driver of future growth. Investment remains focused on undervalued players and industry-specific tailwinds.

English Translation:

Steel Industry Weekly Report Summary

Date: November 9, 2025
Coverage: Steel Sector Analysis

The steel sector experienced significant performance this week, with the CSI steel index climbing 4.57% amid supportive market conditions. Overall, the industry outperformed the CSI 300 Index, which increased by 0.82%.

Production metrics highlighted a slight decline in iron water output and broad-stainless steel inventory levels. Importantly, aggregate steel consumption decreased week-over-week.

Investment Recommendations:

• Focus on companies in the lower-valuation cohort, such as Huah Steel, Nansteel, and Bao Steel, which maintain strong fundamentals and growth prospects.
• Monitor indicators such as the pace of capacity reduction and shifts in demand, especially in high-growth areas like power generation.

Risk Factors:

• Unanticipated adjustments in government production policies.
• Fluctuations in demand due to macroeconomic trends or policy changes.
• Unexpected increases in raw material prices.

Overall, the steel sector remains favorable based on long-term exposure to growth drivers and supportive policy frameworks.