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

The research report from CITIC Construction Investment stated that industrial production has significantly accelerated so far this year, and the role of infrastructure investment as a stabilizing force has become more apparent. However, the characteristic of "strong external and weak internal" in economic operation is still obvious, with real estate investment continuing to decline and insufficient domestic demand, especially the need to consolidate the foundation for consumption recovery. Focusing on the steel industry, in January and February, China's domestic pig iron production was 137.7 million tons, a decrease of 2.7% year-on-year; crude steel production was 160.34 million tons, a decrease of 3.6% year-on-year; and steel production was 221.19 million tons, an increase of 1.1% year-on-year. The 2026 government work report proposed orderly reduction of steel production capacity to promote supply-demand balance and structural optimization. Therefore, the current reduction in crude steel production is not a collapse in demand-driven passive production cuts, but rather a structural restraint in the context of weak real estate and manufacturing support, which reserves space for reduction for the whole year and helps restore the balance of supply and demand and steel profitability.