Steel stocks are leading the decline in Hong Kong markets. As of the time of writing, MAANSHAN IRON (00323) is down 3.89% at HK$2.47; ANGANG STEEL (00347) has fallen 3.69% to HK$2.09; and CHONGQING IRON (01053) decreased by 2.9% to HK$1.34. According to a report by Minsheng Securities, on the supply side, steel mill profits continue to decline, resulting in a slight drop in pig iron and steel production. On the demand side, seasonal demand has not met expectations, with weak apparent demand for rebar and hot rolled coil, and high production levels have led to an inventory build-up in hot coils, while other categories also maintain relatively high inventory levels. In the short term, steel profits have fallen to approximately a loss of HK$100 per ton, and market-driven production cuts may alleviate inventory pressures; in the long term, capacity control will remain a key issue. Additionally, Guotai Junan Securities reported that the negative impact of real estate on steel demand has noticeably weakened, suggesting that demand may gradually bottom out. Even without considering supply-side policies, the industry has been experiencing prolonged losses, and market-driven clearance of supply has begun, indicating a potential gradual recovery in the steel industry’s fundamentals. If supply policies are implemented, the contraction in industry supply may accelerate, leading to faster progress in industry upturn.