CITIC Construction Investment: Crude steel production in January-February decreased by 3.6% year-on-year, leaving room for reduction for the whole year

Ask AI · How does reducing crude steel quantity reflect structural restraint rather than a collapse in demand?

A research report from CITIC Securities Jianyin says that since this year began, industrial production has accelerated noticeably, and the stabilizing role of infrastructure investment has become even more evident. However, the “strong outside, weak inside” characteristics in economic operations remain clear: real estate investment is still declining, and the foundation for strengthening domestic demand—especially consumer recovery—needs to be consolidated. Focusing on the steel industry, in January and February, China’s pig iron output was 137.7 million tons, down 2.7% year over year; crude steel output was 160.34 million tons, down 3.6% year over year; and steel product output was 221.19 million tons, up 1.1%. The 2026 Government Work Report proposes to orderly reduce steel capacity and promote supply-demand balance and structural optimization. Therefore, the current reduction in crude steel quantity is not a demand-collapse-driven, passive cut in production; instead, it is structural restraint in a context where real estate is weak and manufacturing is providing support. This leaves room for a full-year reduction, which can help restore supply-demand balance and per-ton steel profitability.