Steel stocks experienced a collective uptick during the session. At the time of writing, China Oriental Group (00581) rose 5.97% to HK$1.42; China Hanking Holdings (03788) climbed 5.61% to HK$5.27; IRC Ltd (01029) increased 1.92% to HK$0.53; and Chongqing Iron & Steel Company (01053) advanced 1.64% to HK$1.24.
The movement follows a safety incident that occurred at a Baogang steel plate plant on January 18. Cinda Securities believes the Baogang accident may trigger safety inspections at steel mills, potentially leading to temporary production cuts.
Specialized inspections could moderately tighten local capacity, providing support for both costs and supply. Currently, per-ton profits for standard steel are considerable.
Amid the industry's "anti-involution" backdrop, standard steel companies have significant room for earnings improvement and are poised for a potential value re-rating, presenting a promising allocation opportunity for the steel sector.
Guotai Junan Securities stated in a research report that steel demand is expected to gradually bottom out. On the supply side, even without considering potential supply policies, the industry has endured thin profits for an extended period, and market-driven supply rationalization is already emerging.
The institution anticipates a gradual recovery in the fundamental conditions of the steel industry. Should supply policies be implemented, the pace of supply contraction would accelerate, hastening the industry's upward trajectory.
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