HK Stock Market Move | Steel stocks led the decline, with demand in the peak season falling short of expectations. The supply side may see market-driven production cuts.

Steel stocks lead the decline, as of the time of writing, Maanshan Iron (00323) fell by 3.89% to HK$2.47; Angang Steel (00347) fell by 3.69% to HK$2.09; Chongqing Iron (01053) fell by 2.9% to HK$1.34. Minsheng Securities released a research report stating that on the supply side, steel mill profits continue to decline, leading to a slight decrease in pig iron and steel production; on the demand side, seasonal demand is lower than expected, with weak demand for rebar and hot rolled coil, and accumulated inventories of hot rolled coil and other varieties remaining relatively high. In the short term, steel profits have decreased to around a loss of 100 yuan per ton, and supply side may see market-driven production cuts, easing inventory pressure; in the long term, capacity regulation will remain a long-term theme. Guotai-Haitong released a research report stating that the negative impact of the real estate industry on steel demand has clearly weakened, and demand is expected to gradually bottom out; even without considering supply policies, the industry has been in a loss for a long time, and market-driven clearance of supply has begun, with expectations for gradual improvement in the fundamentals of the steel industry. If supply policies are implemented, the industry supply contraction will accelerate, leading to faster industry recovery.