[SMM Hot Topic: Examining Steel Supply and Demand Through the Government Work Report]

The third session of the 14th National People's Congress opened at 9 a.m. on May 5, 2025, at the Great Hall of the People. The session included listening to Premier Qiang Li's report on government work, reviewing the State Council's report on the implementation of the 2024 national economic and social development plan and the draft plan for 2025, as well as the report on the implementation of the 2024 central and local budgets and the draft budgets for 2025. We have extracted and interpreted the content related to steel and the black industry chain from the government work report as follows.

Key Macro Data
Fiscal policy remains "more proactive," while monetary policy mentions implementing a moderately loose monetary policy, timely RRR cuts and interest rate cuts, maintaining ample liquidity, and promoting the healthy development of the real estate and stock markets with greater efforts.

Steel Demand Side
Local government special bonds are planned at 4.4 trillion yuan, an increase of 500 billion yuan from the previous year, primarily for investment in construction, purchasing existing commercial housing, and addressing local government arrears to enterprises.
The total new government debt this year is 11.86 trillion yuan, an increase of 2.9 trillion yuan from the previous year.
A moderately loose monetary policy will be implemented, with timely RRR cuts and interest rate cuts to maintain ample liquidity. Structural monetary policy tools will be optimized and innovated to promote the healthy development of the real estate and stock markets with greater efforts.
Efforts will continue to stabilize and recover the real estate market.
Increased efforts will be made to implement urban village and dilapidated housing renovation.
The acquisition of existing commercial housing will be advanced.
Efforts will continue to ensure the delivery of pre-sold housing.
Qualified agricultural migrant populations will be included in the housing security system.
Urban renewal and the renovation of old urban residential areas will be continuously promoted.
Efforts will be made to boost consumption, improve investment efficiency, and comprehensively expand domestic demand.
300 billion yuan in ultra-long-term special government bonds will be allocated to support consumer goods trade-ins.
Effective investment will be actively expanded, with 735 billion yuan planned for central budgetary investment this year.
Ultra-long-term special government bonds will be utilized to support "two major" construction projects with greater efforts.
The digital transformation of manufacturing will be accelerated.
The development of intelligent connected NEVs, AI-powered smartphones and computers, intelligent robots, and other next-generation intelligent terminals, as well as intelligent manufacturing equipment, will be vigorously promoted.

Steel Supply Side
The transformation and upgrading of traditional industries will be accelerated, guiding manufacturing toward high-end, intelligent, and green development.
The implementation measures for capacity replacement in industries such as steel, cement, and glass will be revised to promote the steady exit of outdated and inefficient capacity.
Policy measures will be introduced to address structural imbalances in key industries, enhancing industrial regulation and upgrading to break "cut-throat competition."
Crude steel production control will continue to be implemented, promoting the reduction and restructuring of the steel industry.

The 2025 target for reducing energy consumption per unit of GDP is set at 3%, higher than the 2024 target of 2.5%, with an actual reduction of 3.8% in 2024.

Overall, the macro data released by the government aligns with previous market expectations, with no significant surprises. On the demand side, the real estate sector remains focused on stabilization and recovery, making it difficult to reverse the sluggish state of the sector or drive incremental steel demand. However, in the "two major and two new" areas, fiscal policy shows some incremental strength, which may create additional steel demand in the future. On the supply side, this year's supply-side adjustments are slightly stronger than in 2024. Currently, domestic steel faces increasing anti-dumping friction, with mounting pressure on exports. Against this backdrop, annual supply reductions may be anticipated!