According to a research report from Guotai Haitong Securities, steel demand from infrastructure and manufacturing sectors is expected to grow steadily. Even without considering supply-side policies, the steel industry has experienced prolonged low profitability, and market-driven consolidation has already begun. The firm anticipates a gradual recovery in the industry's fundamentals. Should supply policies be implemented, the pace of supply contraction would accelerate, speeding up the sector's upward trajectory. Guotai Haitong maintains an "overweight" rating, favoring steel producers with product structure and cost advantages, as well as leading companies expected to demonstrate stronger competitive edges and profitability. Key points from the report include: Demand declined sequentially while inventories rose. Last week (referring to the week of February 23–27, 2026), social inventories of major steel products reached 12.96 million tons, up by 1.14 million tons from the previous week; steel mill inventories stood at 5.5 million tons, increasing by 200,000 tons. In social inventories, rebar stocks totaled 5.68 million tons, rising by 730,000 tons; wire rod inventories were 880,000 tons, up by 150,000 tons; and hot-rolled coil inventories reached 3.57 million tons, growing by 170,000 tons. At steel mills, rebar inventories were 2.33 million tons, up by 120,000 tons; wire rod inventories were 850,000 tons, increasing by 40,000 tons; and hot-rolled coil inventories were 950,000 tons, rising by 10,000 tons. Profitability declined sequentially. Imported iron ore inventories at 45 ports totaled 170.92 million tons, up by 1.46 million tons. The estimated average gross profit per ton for rebar was RMB 192, up by RMB 6 from the previous week, while the simulated average gross profit for hot-rolled coil was RMB 54 per ton, increasing by RMB 18. The simulated average production profit for rebar, lagged by one month, rose by RMB 17 to RMB 143 per ton, and for hot-rolled coil, it increased by RMB 29 to RMB 5 per ton. The Ministry of Industry and Information Technology released the first list of leading and standardized steel enterprises. Demand is expected to stabilize, with supply contraction anticipated to continue. As the real estate sector undergoes deep adjustments, its share of steel demand continues to decline, and the negative drag from real estate on steel demand has significantly weakened. Steel demand from infrastructure and manufacturing is projected to grow steadily. On the supply side, approximately 60% of steel companies are still operating at a loss, indicating that market-driven consolidation is underway. The firm maintains expectations of supply contraction and a gradual recovery in steel fundamentals. An "overweight" rating is reiterated. Long-term, increased industry concentration and a push for high-quality development are inevitable trends in the steel sector. Companies with product structure and cost advantages are poised to benefit significantly. In the context of stricter environmental policies, ultra-low emission upgrades, and carbon neutrality, leading firms are expected to see enhanced competitive advantages and profitability. Risks include slower-than-expected supply contraction and a sharp decline in demand.