HK Stock Market Move | Steel stocks collectively decline, but the steel price increase is insufficient. Upstream pricing power game squeezes price differences.

Steel stocks collectively fell, as of the submission deadline, Angang Steel (00347) fell by 5.81% to HKD 1.62; MAANSHAN IRON (00323) fell by 4% to HKD 2.64; CHONGQING IRON (01053) fell by 1.61% to HKD 1.22. Sinolink had previously released a research report stating that the spring inventory replenishment of steel mills for this year has basically ended, and the intensity has further weakened compared to last year; terminal demand is average, and the increase in steel prices is insufficient, resulting in an average industry profit decrease of 31.7 yuan, currently losing 53 yuan per ton; the impact of the disappointment of important domestic conference policies has been largely priced in, and the geopolitical events causing stagflation expectations + upstream pricing power game squeezing price differentials constitute current suppressive factors for the steel sector. Guotai Haitong stated that steel demand is expected to gradually bottom out; even without considering supply policies, the industry has been experiencing a period of marginal profitability for a long time, and market-driven supply clearance has started to appear. We expect the fundamentals of the steel industry to gradually improve. If supply policies are implemented, the contraction of industry supply will be faster, and the progress of the industry's upward trend will accelerate.