Steel stocks experienced a collective decline in Hong Kong trading. As of press time, CHONGQING IRON (01053) fell 4.72% to HKD 1.21, ANGANG STEEL (00347) dropped 4.06% to HKD 1.89, and MAANSHAN IRON (00323) decreased 3.64% to HKD 2.38.

An institutional report indicated that this year's production restriction policies have shown limited effectiveness. Market participants anticipate steel mills to translate anti-internal competition measures into tangible production cuts, which could accelerate profit recovery in the sector.

Since Q3 last year, the sector's valuation has undergone substantial recovery, shifting from severely undervalued to moderately low levels. Current valuations show minimal bubbles and do not yet reflect expectations for further profit recovery, suggesting continued potential for absolute returns.

Analysts noted that demand may gradually bottom out. Even without policy intervention, prolonged industry losses have begun triggering market-driven supply adjustments, potentially leading to gradual fundamental improvements. Should supply-side policies materialize, faster contraction in production capacity could accelerate the sector's upward trajectory.