Most steel stocks are trading lower, with APAC RESOURCES (01104) falling 4.27% to HK$1.57, MAANSHAN IRON (00323) dropping 3.47% to HK$1.67, ANGANG STEEL (00347) declining 1.65% to HK$1.19, and CHONGQING IRON (01053) slipping 1.11% to HK$0.89.

Recently, several steel companies have issued profit warning forecasts for the 2026 interim results. MAANSHAN IRON expects to record a net loss attributable to shareholders of approximately RMB 0.72 billion for the first half of 2026, narrowing the loss by about RMB 0.03 billion compared to the same period last year. ANGANG STEEL anticipates a net loss attributable to shareholders of approximately RMB 2.047 billion for the first half of 2026, a year-on-year expansion of about 83.59%, with an expected net loss excluding non-recurring items of approximately RMB 2.109 billion, expanding by about 71.32% year-on-year.

Cinda Securities pointed out that based on disclosed data, the overall profitability of the steel industry remains at the bottom of the cycle. Companies like ANGANG STEEL and Benxi Steel Plate are still reporting substantial losses, and the widespread loss situation across the industry has not fundamentally reversed. However, the brokerage noted that this negative earnings news has been fully reflected in current stock prices, as recent adjustments have pushed the price-to-book (P/B) ratios of many general steel companies below 0.5 times, while special steel stocks have also seen significant P/B ratio declines. The sector's valuation is now at historically low levels.

Cinda Securities believes that with the concentrated release of negative interim results, a "shoe-dropping" effect may emerge, limiting further downside for sector valuations. Combining the medium-to-long-term improvement in supply and demand dynamics, short-term cost support, and low valuations, the steel sector is poised for a value recovery, highlighting its allocation value.