Understanding the Market | Steel Stocks Lead in Gains, Institutions Say Market-Based Supply Clearing Has Begun to Appear; If Policies Are Implemented, Supply Contraction Will Accelerate
Steel stocks saw significant gains, with China Oriental Group rising 6.67%, Maanshan Iron & Steel rising 6.92%, Ansteel rising 5.96%, and Chongqing Iron rising 2.88%. Guotai Junan Securities pointed out that the negative impact of real estate on steel demand has weakened, and the market-oriented clearing of supply has begun. If policies are implemented, the contraction of supply will accelerate. Cinda Securities believes that capacity management in the steel industry will strengthen, and under the "stabilizing growth" policy, general steel companies are expected to improve their performance, presenting a good opportunity for allocation in the steel sector
According to Zhitong Finance APP, steel stocks are among the top gainers. As of the time of writing, China Oriental Group (00581) rose by 6.67% to HKD 1.44; Maanshan Iron & Steel Company (00323) increased by 6.92% to HKD 2.78; Ansteel (00347) climbed by 5.96% to HKD 2.31; Chongqing Iron & Steel Company (01053) went up by 2.88% to HKD 1.43.
Guotai Junan Securities released a research report stating that the negative drag effect of real estate on steel demand has significantly weakened, and demand is expected to gradually bottom out. On the supply side, even without considering supply policies, the industry has been in a loss for a long time, and market-driven supply clearance has begun to appear. It is anticipated that the fundamentals of the steel industry are expected to gradually recover. If supply policies are implemented, the contraction speed of industry supply will be faster, and the industry's upward progress will unfold more quickly.
Cinda Securities indicated that against the backdrop of anti-involution, through safety production supervision and curbing disorderly competition and excess capacity release, capacity management in the steel industry is expected to be further strengthened. We believe that under the influence of overseas tariffs, general steel companies with a low export ratio are less affected. Coupled with the national "stabilizing growth" policy, the demand for steel in industries such as real estate and infrastructure is expected to marginally improve. Currently, the profit per ton of general steel is considerable, and in the context of the industry's "anti-involution," there is significant room for performance improvement for general steel companies, which are expected to welcome value restoration, and the steel sector is also expected to present good allocation opportunities
