【From Steel to Real Estate】The "Destruction and Construction" at the Turning Point of Transformation

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【From Steel to Real Estate】The "Destruction and Construction" at the Turning Point of Transformation

In 2025, two pillar industries of the Chinese economy, steel and real estate, have drawn significant attention: the steel industry faces weak sales and prices, putting operations under pressure; the real estate sector is attracting market focus.

1. Steel Industry: Operational Pressure Beneath Surface Improvement

Data from the National Bureau of Statistics show that from January to October 2025, the steel smelting and processing industry achieved a profit of 105.32 billion yuan, turning a loss into a profit of 128.94 billion yuan year-on-year. However, monthly profits fluctuated sharply: a loss of 1.55 billion yuan in January–February, a peak of 19.34 billion yuan in August, and a sudden drop to 7.98 billion yuan in October, down 41% month-on-month and 25.9% year-on-year, respectively. This volatility highlights the fragility of the industry's supply-demand balance.

Currently, the steel industry is under dual pressure of "off-season demand + overcapacity." In November 2025, rebar inventory decreased from 5.9254 million tons to 5.3148 million tons, but actual sales dropped from 19.5337 million tons to 22.794 million tons, showing an abnormal pattern of "inventory decline, weaker demand."

In terms of subcategories, hot-rolled coil inventory stood at 3.2208 million tons while sales were only 3.2022 million tons, and oversupply forced enterprises to cut prices. The decline in cold-rolled coil inventory was due to steel mill production cuts (output 847,600 tons, month-on-month down 2,300 tons), rather than demand recovery.

Overcapacity intensifies internal competition in the industry, causing costs and selling prices to diverge, leading to depressed profitability: the steel industry's profit margin has fallen below 2%, and only 35% of sample steel mills are profitable, hitting a new low for the year.

Although rebar production was reduced by 18,800 tons in November, total industry output still reached 8.5571 million tons (up 58,000 tons month-on-month), and capacity utilization remained low. Enterprises, in order to retain customers, have resorted to "trading price for volume," with profits per ton of steel in October only 96 yuan, approaching the breakeven point for some.

The market currently holds strong expectations that year-end meetings will release steel industry regulation policies, anticipating measures from both capacity control and demand guidance—clarifying the path for capacity optimization during the "15th Five-Year Plan" period, while releasing reasonable demand through infrastructure project reserves. If implemented effectively, such policies could curb the expansion of industry losses.

2. Real Estate Industry Adjustment

A certain real estate enterprise still acquired land worth 12.4 billion yuan in Chengdu, Xuzhou, and other cities in the first ten months. This move serves both to quickly recover funds through high-quality plots and to signal "normal operations" to the market, while implicitly reflecting expectations of favorable policies.

At the industry level, the continuous expansion of the policy toolbox is pushing real estate debt management from "extension" to "reduction." Such policy support has allowed companies like Vanke to see a way out. As the year-end meeting approaches, the market generally expects further clarification of detailed measures for real estate debt resolution and optimization of financing environments. These substantive benefits are crucial support for companies to balance the dilemma between acquiring land and repaying debt.

3. Industry Insights: Challenges and Directions in Transformation

Upstream steel profit margins are below 2%, and only 35% of steel mills are profitable; real estate companies are trapped by debt. Currently, industry survival highly depends on substantive policy support—steel industry anticipates the meeting to clarify capacity clearance and high-end guidance, while the real estate sector relies on debt restructuring policies to relieve liquidity pressure. These policy directions meet immediate rescue needs and provide clear guidance for traditional industry transformation.

The year-end economic meeting is expected to further clarify the transformation paths of the two industries: the steel industry should abandon the obsession with scale, leverage policy support for R&D, and focus on high value-added products such as special steel and steel for new energy applications.

The real estate industry, under policy guidance, needs to shift from "development and sales" to "operations and services," relying on deep resource integration to focus on long-term rental apartments, smart logistics, and other policy-supported areas, cultivating stable cash flow and transforming into an urban service provider. This is both a supportive direction and the core of sustainable industry development.

The internal competition in steel is an inevitable path for the economy to shift from high-speed growth to high-quality development, while policy support and scientific planning serve as the "escort ship" to navigate cycles. Policy signals released at the year-end meeting will provide fundamental guidance for both industries. Only by closely following policy orientation and reshaping competitiveness through "capacity reduction, innovation strengthening, and quality improvement" can enterprises achieve rebirth under the dual effect of policy support and internal transformation.

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