Guosheng Securities: The steel industry has entered a new stage of “equal emphasis on energy saving and carbon reduction”, and the fundamentals of steel are expected to continue to improve in the medium to long term

The Zhitong Finance App learned that Guosheng Securities released a research report saying that steel production increased sequentially in mid-September, and the steel industry entered a new stage of “putting equal emphasis on energy saving and carbon reduction.” Expectations for subsequent supply-side regulation and transformation and upgrading of the industry still exist. Combined with the trend of improving demand, the fundamentals of steel are expected to continue to improve in the medium to long term. From a medium- to long-term value perspective, we can focus on high-quality steel companies such as Baosteel (600019.SH), Nangang Steel (600282.SH), Valin Steel (000932.SZ), Fangda Special Steel (600507.SH), and New Steel (), which benefit from the oil and gas boom cycle, and Xinxing Cast Pipe (000778.SZ), which has benefited from new coal and power generation and the oil and gas boom cycle, and Changbao (002478.SZ), which has benefited from the recovery of demand 600782.SH Yongjin Co., Ltd. (603995.SH) and nickel-plated steel shell business.

Investment strategy: US bond yields continue to rise, asset prices are under further pressure, and it is difficult for the market to have trending performance recently. The US fiscal deficit has remained high for a long time, causing a sharp increase in the supply of US treasury bonds. At the same time, to make matters worse, American companies' demand for AI financing is also being further expanded, further boosting US bond yields while diverting capital. Therefore, regardless of whether the Federal Reserve raises interest rates in the later stages, the yield on US medium- and long-term treasury bonds is expected to remain easy to rise and difficult to fall in the future.

In the context of the US increasing absorption of global liquidity, the Chinese government has strengthened controls on cross-border capital flows, while promoting a stable long-term appreciation of the RMB to hedge the impact of widening domestic and foreign interest spreads and ease the pressure on the domestic market. However, the overall lack of incremental capital has also caused the market to remain in a state of shock recently. Maintaining high US interest rates will also make our own fiscal pressure even heavier. The recent interest rate hike by the Federal Reserve is beneficial to restoring the credibility of the Federal Reserve. However, under fiscal pressure, the bank believes that it may be a luxury for the Federal Reserve to maintain its so-called independence in the future. In the trade-off between fiscal and inflation, the vast majority of national central banks will eventually obey finance, and fiscal dominance is likely to be the ultimate outcome. A new round of monetization of fiscal deficits may be gradually approaching. Gold's long-term logic remains strong. In terms of industrial metal demand, it is necessary to observe the implementation progress of future financial expenditure support. Earlier, replacement value was used to estimate leading companies in the steel industry. Currently, these companies are in a low position in absolute valuation.

Guosheng Securities's main views are as follows:

Iron water production has declined, and the decline in stocks has increased.

The utilization rate of blast furnace production capacity across the country declined this week. The utilization rate of blast furnace production capacity in 247 domestic steel mills was 88.5%, -0.8 ct, -1.9 pct; the weekly output of the five major types of steel was 7.797 million tons, -1.8% month-on-month, and -9.9%; iron and water production declined this week, and the average daily iron and water production decreased by 20,000 tons to 2.357 million tons. The decline in steel production was greater than that of hot coil production;

In terms of inventory, the weekly social inventory of the five major steel varieties this week was 10.992 million tons, -4.1% month-on-month, +0.9%, steel mill inventory was 3.828 million tons, -2.2% month-on-month, and -9.2% year-on-year; total steel inventory decreased by 3.6%, an increase of 2.5 pct from last week, and steel mill inventory and social inventory declined; this week's apparent consumption of the five major types of steel was 8.354 million tons, +3.0% month-on-month, and -4.4% compared with the same period. 89,000 tons, +10.1% month-on-month Compared to the same period, -5.3%, the five major types of steel meters need to be improved this week. Rebar meters need to be increased dramatically, and the average weekly value of construction steel transactions was 98,000 tons, an increase of 3.2% over the previous month; this week's steel spot prices were basically the same as last week. The immediate gross profit of mainstream steel varieties did not change much. The profit margin of 247 steel mills was 6.9%, down 0.8 pct from month to month.

Steel production increased sequentially in mid-September, and the steel industry entered a new stage of “equal emphasis on energy saving and carbon reduction”.

In mid-September 2026, the China Steel Association focused on the daily steel production of 1.855 million tons of steel, an increase of 3.4% over the previous month. According to this estimate, in mid-September, the country produced 3.74 million tons of steel per day, an increase of 1.7% over the previous month. Recently, the Ministry of Industry and Information Technology officially issued the “15th Five-Year Plan” for Green and Low-Carbon Industrial Development, which clearly requires that carbon dioxide emissions in the industrial sector peak by 2030. Unlike the past, the “Plan” is no longer just a directional call, but directly provides clear quantitative indicators, specific institutional arrangements, and a clear implementation path. Expectations for subsequent supply-side regulation and transformation and upgrading of the industry still exist. Combined with the trend of improving demand, the fundamentals of steel are expected to continue to improve in the medium to long term.

Steel pipe companies continue to benefit from the increase in coal and electricity installations and the oil and gas boom expectations.

According to Wind data, from January to July 2026, domestic thermal power investment was 116.06 billion yuan, up 1.2% year on year, and nuclear power investment was 77.33 billion yuan, up 6.7% year on year. In the current context of autonomous and controllable energy and accelerated planning and construction of new energy systems, targets related to coal power and nuclear power plant construction are expected to benefit significantly; in addition, targets related to oil and gas extraction and transportation pipelines are expected to benefit from the oil and gas industry boom cycle.

Risk warning: Domestic production control policies exceed expectations, downstream demand falls short of expectations, raw material prices have risen above expectations, geopolitical risks.