China Steel Slow recovery

Research evidence excerpt

China Steel Slow recovery

14 May 2026

China Steel EquitiesMetals & Mining

Slow recovery China

◆ 2025 losses largely persist into 1Q26, with limited signs of an Howard Lau*, CFA

early earnings turnaround Analyst, China Materials

The Hongkong and Shanghai Banking Corporation Limited

howard.h.b.lau@hsbc.com.hk

◆ Supply discipline will gradually narrow the surplus, supporting +852 2996 6625

a slow margin stabilisation by late 2026, with pushback risk Harikrishna C S*

Associate

Bangalore

◆ Maintain Hold ratings across coverage; we lower earnings

estimates and cut TPs to reflect a slower recovery path * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Earnings remain under pressure: In 1Q26, earnings stayed under pressure across

our steel coverage, extending the weak trend seen in 2025. Angang and CSC

reported net losses while Maanshan delivered a marginal profit. We attribute

Maanshan’s relative strength to benefiting as a subsidiary of Baowu Steel Group,

which provides operational support, efficiency improvements, cost advantages, and a

stronger product mix.

Policy-led supply discipline may stabilise margins by late 2026, but enforcement

slippage could push back the inflection: We see China’s steel market likely to

remain burdened by oversupply and squeezed margins. Demand continues to decline,

with continued property activity contraction and plateaued infrastructure spending.

New construction starts extended their multi-year downturn, falling c20% y-o-y in

1Q26. YTD exports are also down c10% y-o-y, attributable to new export licensing

requirements and the Hormuz blockade. We still expect exports to stay relatively

resilient over full-year 2026 amid weak domestic demand. While benchmark steel