I. Macro Environment and Policy Drivers

Domestic economic recovery and policy support

In 2025, China will continue its proactive fiscal policy and moderately loose monetary policy. It will expand infrastructure investment through tools such as special bonds and ultra-long-term special Treasury bonds (with an estimated scale of over 2 trillion yuan) to boost domestic demand growth. After the Two Sessions, policy expectations have strengthened. The concentrated start of infrastructure projects will drive the recovery of demand for construction steel. In addition, the real estate policy aims to "stop the decline and stabilize", and the renovation of urban villages and the construction of affordable housing may partially offset the decline in steel demand in the real estate sector.

The uncertainty of the international environment

The Trump administration may impose additional tariffs (such as a 25% tariff on steel and aluminum products), coupled with anti-dumping measures from countries like Vietnam and South Korea, posing resistance to China's steel exports. However, the Belt and Road Initiative and the demands of emerging markets (such as the Middle East and Africa) may partially offset the contraction of the markets in Europe and the United States.

Ii. Analysis of Supply and Demand Patterns

Supply side: Capacity optimization and output control

The policy continues to promote capacity replacement and ultra-low emission transformation, eliminating backward production capacity. The output of crude steel is expected to decline by 1% to 1.5% year-on-year (it may drop to 990 million tons by 2025).

Electric furnace steel has been continuously cleared due to high costs. Long-process steel mills maintain profits by adjusting the output of molten iron, and the supply elasticity is limited.

Demand side: Structural differentiation and slow recovery

Construction steel: Infrastructure development (such as urban pipe galleries and water conservancy projects) supports demand, but new real estate starts are sluggish and the transmission cycle is relatively long. The decline in demand for the whole year may narrow.

Steel for manufacturing: Due to the policy of trade-in for old automobiles and home appliances and the growth in demand for high-end manufacturing, sheet steel (such as hot-rolled and medium and heavy plates) has performed better than building materials.

Exports: It is expected that exports will maintain inertial growth throughout the year (110 million tons in 2024), but the growth rate will slow down due to trade frictions.

Iii. Cost and Price Fluctuation Range

Differentiation in raw material prices

The supply of iron ore has increased (the four major mines have increased production), and the price may fall to the range of 80-110 US dollars per ton. Coke prices may rise slightly due to improved supply and demand.

Scrap steel prices remain resilient supported by demand, exerting pressure on short-process costs.

Prediction of steel price trends

Overall trend: The contradiction between supply and demand has eased, and the price center has shifted downward compared to 2024. However, under the support of policies and costs, the price has fluctuated within a range throughout the year. The main contract of rebar futures is expected to fluctuate within a range of 2,600 to 3,600 yuan per ton, and that of hot-rolled coil is 2,700 to 3,700 yuan per ton.

Phased characteristics: Some institutions predict that prices will show a "high in the first half and low in the second half" or "W-shaped" trend. The low points may occur in the second quarter (the off-season for demand) and the fourth quarter (when the policy effect weakens), while the high points will be driven by the peak season and the implementation of policies.

Iv. Summary

In 2025, the steel market will exhibit the characteristics of "weak recovery and strong volatility", with the price center shifting downward but the opportunity for a phased rebound still remaining. It is recommended that industry participants pay attention to policy dynamics, inventory changes and cost support, and manage risks through tools such as the combination of futures and spot trading. In the long term, the transformation and upgrading of industries (such as green and low-carbon, and high-end development) will reshape the competitive landscape