According to the Fitch Ratings forecast, the real estate stimulus measures recently announced in the mainland will help stabilize the demand for basic materials, boost manufacturers' confidence, and achieve more reasonable pricing. However, weak downstream demand, coupled with the lack of significant capacity reduction, will suppress price rebounds.

The steel industry continues to face challenges, with production in the first nine months of this year declining by 4% year-on-year, and average selling prices also falling. As downstream activities increase driving average prices to rise, steel producers' profit margins began to rebound in September, continuing to rise in October. However, the bank believes that if production is not controlled, the widening profit margins may not be sustainable. As for cement, production in the third quarter decreased by 12% year-on-year due to weak demand, but average prices increased by 7% year-on-year.

Fitch Ratings expects that major producers, after prolonged losses, will adopt more reasonable pricing strategies, leading to moderate price and profit margin increases. However, due to the lack of significant demand growth and no apparent production capacity reduction, this may restrain price rebound trends.

In contrast, supported by investments in green energy and healthy manufacturing activities, aluminum production in the first nine months of this year increased by 4.6% year-on-year. Despite some easing of previous supply restrictions, due to strong demand growth, Fitch Ratings expects aluminum prices to stabilize. The bank points out that the latest housing stimulus policies announced by the government since the end of September are expected to support demand for basic materials. However, considering the slowing economic outlook and the trend of population peaking, the structural downward trend in housing demand may continue.