Guosheng: Steel production declined in the first quarter, and direct steel exports fell.

Guosheng released a research report stating that in March 2026, crude steel production was 87.04 million tons, a year-on-year decrease of 6.3%, with a daily output of 2.808 million tons, an increase of 3.3% month-on-month. Currently, direct exports and indirect exports of steel account for about 25% of domestic steel production. In terms of direct exports, net steel exports in the first quarter of 2026 were 23.38 million tons, a decrease of 9.7% year-on-year. With the rise in overseas energy costs, the price difference between steel domestically and abroad is expected to further expand, driving the export growth rate to rebound. The increase in China's share of the global manufacturing market will face the impact of a decline in total demand, but in the medium to long term, the aftermath of geopolitical tensions will accelerate the transformation of the world's energy structure, which will be more beneficial for China's manufacturing industry to break through. Guosheng's main points are as follows: In March 2026, the data on the iron and steel industry and previous customs import and export: In March 2026, crude steel production was 87.04 million tons, a year-on-year decrease of 6.3%, with a daily output of 2.808 million tons, an increase of 3.3%; From January to March, crude steel production was 247.55 million tons, a year-on-year decrease of 4.6%; In March, China's pig iron production was 73.28 million tons, a year-on-year decrease of 3.3%; From January to March, pig iron production was 210.98 million tons, a year-on-year decrease of 2.9%; In March, China's steel production was 130.98 million tons, a year-on-year decrease of 2.3%; From January to March, steel production was 351.44 million tons, a year-on-year decrease of 1.7%; In March, China's steel exports were 9.13 million tons, a year-on-year decrease of 12.6%; From January to March, steel exports were 24.72 million tons, a year-on-year decrease of 9.9%; In March, China's steel imports were 510,000 tons, a year-on-year increase of 2.2%, and from January to March, steel imports were 1.34 million tons, a year-on-year decrease of 14.1%; In March, China's iron ore imports were 104.74 million tons, a year-on-year increase of 11.5%; From January to March, iron ore imports were 314.76 million tons, a year-on-year increase of 10.5%. As steel production declines, the economic drive continues to shift towards consumption. Given the poor statistical quality of the year-on-year base for crude steel, decoupling the growth rate of steel production from actual economic growth may be more in line with the actual situation. In the first quarter of 2026, China's apparent steel consumption was 328.06 million tons, a year-on-year decrease of 1.4%; Structurally, in the first quarter of 2026, China's fixed asset investment (excluding farmers) was 10.708 trillion yuan, a year-on-year increase of 1.7%; total retail sales of consumer goods was 12.7695 trillion yuan, a year-on-year increase of 2.4%; Industrial value added of enterprises above designated size increased by 6.1% year on year. Currently, China's industrialization has entered a mature stage, and the overall economy is likely to remain stable and controllable. In the first quarter, direct steel exports fell, while indirect exports remained strong. Currently, direct exports and indirect exports of steel account for about 25% of domestic steel production. In terms of direct exports, net steel exports in the first quarter of 2026 were 23.38 million tons, a year-on-year decrease of 9.7%. Among them, in March, net exports were 8.62 million tons, a year-on-year decrease of 13.4%, which may be related to the export permit management of steel products and the appreciation of the renminbi. With the rise in overseas energy costs, the price difference between steel domestically and abroad is expected to further expand, driving the export growth rate to rebound. Since 2025, strong exports of industries such as automobiles and home appliances have also driven the indirect export of steel. In the first quarter of 2026, China's total merchandise trade import and export was 11.84 trillion yuan, an increase of 15% year-on-year. Among them, exports were 6.85 trillion yuan, an increase of 11.9%. Structurally, in the first quarter, China's exports to ASEAN increased by 17.5%, exports to the EU increased by 18%, and exports to the UK increased by 15.3%. The rise in energy prices caused by the US-Iran conflict is beneficial for China's exports in the short term. The daily loss of 10 million barrels of oil supply will first impact Southeast Asia, which has a weak energy security, and orders will be redirected domestically. China's manufacturing sector can relatively absorb more energy costs, further increasing its international price competitiveness. At the same time, new energy products are important export products for China. In the context of a significant increase in energy prices, the overseas demand for these products will continue to rise. However, prolonged conflicts may cause losses in employment and income for Asian manufacturing countries, leading to a simultaneous decline in supply and demand. Additionally, after the US diesel prices increase this year, it may offset the effects of the US BEAUTIFUL Act's fiscal expansion, and the growth rate of non-energy consumption may be lower than previously expected. The increase in China's share of the global manufacturing market will face the impact of a decline in total demand. The current passage time through the Strait of Hormuz is still uncertain and requires further observation. Future market analysis: In the short term, there is no ability to judge the direction of the war, only a close observation of the development of the situation. However, from a medium-term perspective, the aftermath will accelerate the transformation of the world's energy structure, which will be more favorable for China's manufacturing industry to break through, accelerating the revaluation of these globally leading manufacturing industries. After the impact subsides, it is recommended to pay attention to the following targets: Hunan Valin Steel (000932.SZ), Nanjing Iron & Steel (600282.SH), Baoshan Iron & Steel (600019.SH), Fangda Special Steel Technology (600507.SH), Xinyu Iron & Steel (600782.SH), and Zhejiang JIULI Hi-tech Metals 002318.SZ), benefiting from the cycles of oil and gas and nuclear power; Xinxing Ductile Iron Pipes (000778.SZ), benefiting from pipeline renovation and general steel profitability elasticity; Jiangsu Changbao Steeltube (002478.SZ), benefiting from new coal-fired power plants and the cycles of oil and gas; and Yongjin Technology Group (603995.SH), benefiting from demand recovery and nickel-plated shell business. It is recommended to pay attention to Jiang Su Wujin Stainless Steel Pipe Group (603878.SH), which benefits from new coal-fired power plants and the trend of import substitution. Risk Warning: Domestic production control policies exceed expectations, downstream demand falls short of expectations, and raw material prices rise above expectations.