Steel stocks led the gains in Hong Kong trading. As of press time, CHINA ORIENTAL (00581) rose 6.67% to HK$1.44; MAANSHAN IRON (00323) gained 6.92% to HK$2.78; ANGANG STEEL (00347) climbed 5.96% to HK$2.31; and CHONGQING IRON (01053) advanced 2.88% to HK$1.43.

Guotai Haitong Securities issued a research report stating that the negative drag from real estate demand on steel has significantly weakened, with demand expected to gradually bottom out. On the supply side, even without considering supply policies, the industry has been operating at losses for an extended period, and market-based supply clearing has begun to emerge. The firm expects the steel industry fundamentals to gradually recover. Should supply policies be implemented, industry supply contraction would accelerate, leading to faster industry recovery.

Cinda Securities noted that amid the anti-involution backdrop, steel industry capacity management is expected to be further strengthened through safety production inspections and measures to curb disorderly competition and excess capacity release. The firm believes that under the impact of overseas tariffs, general steel companies with lower export ratios will be less affected. Combined with the national "stable growth" policies, steel demand from real estate and infrastructure sectors is expected to improve marginally.

Currently, per-ton steel profits for general steel are considerable. Under the industry's "anti-involution" backdrop, general steel companies have significant room for performance improvement and are expected to welcome value restoration. The steel sector is also expected to present allocation opportunities.