Core Viewpoint - The steel industry is experiencing a recovery in profits due to unexpected demand from manufacturing and direct exports, alongside the implementation of "anti-involution" policies, leading to an increase in supply optimization expectations [1][2]. Group 1: Industry Performance - In Q1-Q3 2025, the SW steel index rose by 24.00%, ranking 17th among Shenwan industries, driven by improved manufacturing and export demand [1][2]. - From October 2025 to present, the SW steel index has continued to rise by 14.19%, ranking 4th among Shenwan industries [1][2]. - In Q3 2025, the profitability of the rebar sector turned positive, with a 102.59% increase in special steel profits year-on-year, while the gross profit margin rose to 7.59% and net profit margin increased to 2.19% [3]. Group 2: Policy and Structural Changes - The steel industry is focusing on differentiated production restrictions and classified management to promote high-value, low-carbon, and intelligent transformations, enhancing industry concentration and optimizing structural layout [3]. - Policies such as ultra-low emission upgrades and dual control of energy consumption are expected to drive capacity optimization and accelerate the elimination of outdated production capacity [3]. Group 3: Demand Drivers - The manufacturing sector, particularly in machine tools, excavators, and commercial vehicles, remains resilient, with direct exports showing significant year-on-year growth, supporting steel demand [3]. - The construction sector is experiencing weak new starts, but forward-looking indicators like sales and land acquisition are showing reduced declines, stabilizing demand for construction steel [3]. Group 4: Investment Recommendations - Steel capacity optimization is expected to be a key focus moving forward, with a push for differentiated management to support competitive enterprises [4]. - Attention is recommended for leading steel companies such as Hualing Steel, Baosteel, and Nanjing Steel, as well as flexible stocks like Fangda Special Steel and New Steel [4]. - The special steel sector is projected to benefit from downstream demand in automotive, nuclear power, and oil and gas extraction, with companies like Xianglou New Materials and Jiuli Special Materials highlighted for stable growth [4]. - In the raw materials sector, companies with clear non-ferrous resource increments, such as Dazhong Mining and Hebei Steel Resources, are recommended for investment [4].

Group 1 - The traditional belief that "long processes must be high carbon" is being challenged as Wuhan Iron and Steel Corporation successfully produced steel with over 50% scrap steel content, marking a significant breakthrough in green low-carbon smelting technology [1] - Increasing the scrap steel ratio is crucial for reducing carbon emissions, with a 10% increase in scrap steel leading to approximately a 6% reduction in CO2 emissions per ton of steel [1] - Other companies, such as Hunan Lianyuan Steel and Shougang Jingtang, have also achieved high scrap steel ratios in their production processes, with reductions in CO2 emissions of 43% and successful trials with over 55% scrap steel, respectively [1][2] Group 2 - The advancements in scrap steel ratios indicate that the steel industry's low-carbon transformation is moving from technical demonstration to large-scale application, with the current average scrap steel ratio in the industry around 20% [2] - Key technological breakthroughs in temperature control and composition stability in steelmaking processes have enabled these advancements, with companies employing various innovative methods to achieve high scrap steel ratios [2] - The large scrap steel ratio technology has been successfully applied to high-end products such as automotive sheets and home appliance sheets, demonstrating its ability to meet stringent quality requirements while achieving carbon reduction goals [3] Group 3 - The market favorability of large scrap steel ratio technology stems from its significant advantages in environmental protection, raw materials, and product quality [3] - Other innovative technologies, such as Baosteel's full scrap electric furnace smelting and Hebei Iron and Steel's hydrogen-based direct reduction iron technology, are also contributing to the industry's efforts towards near-zero carbon emissions [3] - Maximizing the use of scrap steel is viewed as the most practical and effective choice for the steel industry to achieve green low-carbon development until more advanced technologies like hydrogen metallurgy are fully developed [3]

Investment Rating - The report maintains a "Buy" rating for the steel industry, highlighting the potential for profit recovery and capacity optimization as key investment themes [4][5]. Core Insights - The steel sector has shown a significant recovery in profitability, with the SW Steel index rising by 24.00% in Q1-Q3 2025 and 14.19% from October 2025 to date, outperforming major indices [1][11]. - The report emphasizes the importance of differentiated production restrictions to promote industry consolidation and the transition towards high-value, low-carbon, and intelligent production methods [2][3]. - Manufacturing and direct export demand remain resilient, supporting steel consumption despite a weak construction sector [2]. Summary by Sections Steel Sector Performance - In Q1-Q3 2025, the steel sector's net profit saw a year-on-year increase of 747.63%, with a gross margin recovery to 7.59% and a net margin of 2.19% [17][21]. - The performance of the steel sector has been strong, with the SW Steel index ranking 4th among all sectors since October 2025 [1][11]. Supply-Side Policies - The introduction of differentiated production restrictions aims to eliminate inefficient capacity and enhance industry concentration [2][3]. - New policies are expected to drive the optimization of production capacity, with a focus on high-end, green, and intelligent manufacturing [3][51]. Demand-Side Dynamics - The manufacturing sector, particularly in machinery and commercial vehicles, continues to show strength, while direct exports have increased significantly, supporting steel demand [2][3]. - The construction sector remains weak, but early indicators suggest a stabilization in demand for construction steel [2]. Investment Recommendations - The report suggests focusing on leading steel companies that are well-positioned to benefit from policy support and capacity optimization, such as Hualing Steel, Baosteel, and Nanjing Steel [3][4]. - For special steel, companies benefiting from downstream demand in automotive and energy sectors are recommended, including Xianglou New Materials and Jiuli Special Materials [3]. - In the raw materials sector, companies with clear growth in non-ferrous resources, such as Dazhong Mining and Hebei Steel Resources, are highlighted [3].

Investment Rating - The report assigns an investment rating of "Positive" for the steel industry, indicating an expectation of overall returns exceeding the benchmark index by more than 10% [4]. Core Insights - The Simandou iron ore project in Guinea, which has the largest and highest-grade undeveloped iron ore reserves globally, officially commenced production on November 11, 2025. Chinese enterprises hold over 50% of the equity resources in the project [2][11]. - The initial combined production capacity of the Simandou project is expected to reach 120 million tons per year, with production ramping up from 2026 and expected to reach full capacity around 2030. This project is strategically significant for China to reduce its reliance on Australian and Brazilian iron ore imports [2][16]. - The Simandou project is anticipated to contribute 5% to global iron ore supply upon reaching full production, equivalent to 10% of China's iron ore imports in 2024 [16]. Summary by Sections Project Overview - The Simandou iron ore project is located in southeastern Guinea and features significant reserves of over 4.4 billion tons with an average iron content exceeding 65% [11][12]. - The project is divided into northern and southern blocks, with major Chinese companies like China Baowu and Chalco leading the northern block's development [12][15]. Market Impact - The project is expected to shift the global iron ore supply-demand balance from a tight equilibrium to a more relaxed state, leading to a gradual decline in iron ore prices. The average all-in sustaining cost (AISC) for Simandou is projected to be in the 75th percentile globally, which will pressure higher-cost marginal mines [3][22][23]. - The anticipated increase in supply from Simandou, along with expansions from other major mines, is expected to create downward pressure on iron ore prices, which have been fluctuating around $100 per dry ton [22][23]. Strategic Significance - The Simandou project exemplifies a successful model for Chinese enterprises to secure strategic resources abroad through collaborative efforts, enhancing China's bargaining power in the global iron ore market [24][25]. - The project is part of a broader strategy to diversify China's iron ore import sources and reduce dependency on the four major mining companies that dominate the market [16][20].

Group 1 - The steel industry is expected to see improved profitability due to three main factors: declining raw material prices, supply-side adjustments, and resilient demand from manufacturing [3][5][9] - The West Simandou iron ore project is set to commence production in November 2025, significantly increasing iron ore supply and contributing to a downward trend in iron ore prices [3][71] - Government policies aimed at reducing overcapacity and promoting energy efficiency are expected to accelerate the exit of outdated production capacity, leading to a more optimized supply structure in the steel industry [3][16][10] Group 2 - Demand for steel is projected to stabilize in the construction sector, while manufacturing demand remains resilient, particularly for flat steel and special steel products [3][19][25] - The overall steel demand in China is forecasted to decline slightly, with total demand expected to be 9.05 billion tons in 2025, a decrease of 0.11% from 2024 [19][20] - The construction sector's share of steel demand is decreasing, while the manufacturing sector's share is increasing, indicating a shift in consumption patterns [3][19] Group 3 - The report highlights that the profitability of steel companies is recovering, with a stronger performance expected in flat steel compared to long steel products [3][85][82] - The average profit margin for steel companies is projected to improve as cost pressures ease, with a focus on companies with stable demand and low valuations [3][87][90] - Investment recommendations include focusing on companies like Baosteel, Nanjing Steel, and Hualing Steel, which are expected to benefit from the shift towards manufacturing [3][95][94]

Core Viewpoint - The establishment of the "Yangtze River Delta Offshore CCUS Industry Alliance" aims to promote carbon capture, utilization, and storage (CCUS) technology as a strategic approach to achieving carbon peak and carbon neutrality goals while ensuring national energy security [1] Group 1: Alliance Formation - The alliance is initiated by CNOOC (China National Offshore Oil Corporation) in collaboration with over 30 entities, including China Baowu Steel Group, COSCO Shipping, Zhejiang Energy Group, and several universities [1] - The alliance will create a collaborative innovation system guided by the government, led by enterprises, and supported by academic institutions [1] Group 2: Focus Areas - Key activities will include information sharing, technology exchange, talent cultivation, policy research, standard formulation, project demonstration, and industry development [1] - The alliance will focus on critical core technologies and promote the construction of demonstration projects for commercial and large-scale applications [1] Group 3: Regional Impact - The establishment of the alliance is seen as a catalyst for Shanghai to implement the national "dual carbon" strategy, enhancing technological innovation and industrial collaboration [1] - The initiative aims to inject new momentum into the green and low-carbon development of the Yangtze River Delta region [1]

Core Points - Baosteel Co., Ltd. experienced a stock price decline of 2.09% on November 18, closing at 7.50 CNY per share with a trading volume of 466 million CNY and a turnover rate of 0.28% [1] - The company has seen a year-to-date stock price increase of 10.55%, with a 1.83% decline over the last five trading days, a 4.75% increase over the last 20 days, and a 7.73% increase over the last 60 days [1] - Baosteel's main business revenue composition includes cold-rolled carbon steel sheets (51.22%), hot-rolled carbon steel sheets (28.50%), thick plate products (7.47%), steel pipe products (5.76%), long products (4.49%), and other steel products (1.89%) [1] Financial Performance - As of September 30, Baosteel reported a total revenue of 232.44 billion CNY for the first nine months of 2025, a year-on-year decrease of 4.29%, while the net profit attributable to shareholders increased by 35.32% to 7.96 billion CNY [2] - The company has distributed a total of 126.49 billion CNY in dividends since its A-share listing, with 16.08 billion CNY distributed over the last three years [3] Shareholder Information - As of September 30, 2025, Baosteel had 224,900 shareholders, a decrease of 2.54% from the previous period, with an average of 96,848 circulating shares per shareholder, an increase of 2.61% [2] - The largest circulating shareholder, Hong Kong Central Clearing Limited, holds 805 million shares, a decrease of 150,700 shares from the previous period [3]

Investment Rating - The industry investment rating is Neutral, maintained [10] Core Views - The successful commissioning of the Simandou project and the gradual emergence of a relaxed iron ore trend are significant developments. Despite limited actual supply-demand impact on iron ore by 2025, the project's capacity of 120 million tons and the push for "anti-involution" suggest that global iron ore demand may not see significant growth. The trend towards relaxation in iron ore supply is becoming clearer [2][6] - Current global iron ore cash costs are around $90 per ton, and as the surplus increases, iron ore prices may gradually return to cost support levels. In the short term, high iron output and strong macroeconomic growth expectations at year-end support iron ore prices. However, as Simandou's capacity ramps up next year, prices may begin a smoother downward trend after the seasonal peak in April [2][6] Summary by Sections Section 1: Market Performance - The seasonal effect has deepened, with apparent steel demand continuing to weaken. The apparent consumption of the five major steel products decreased by 3.13% year-on-year and 0.82% month-on-month. The average daily pig iron output increased to 2.3688 million tons, up by 2.66 thousand tons per day [4] - Steel inventory continues to decrease, maintaining a median level. Total steel inventory decreased by 1.88% week-on-week and increased by 20.48% year-on-year. Prices for rebar and hot-rolled steel have also seen slight declines [4] Section 2: Simandou Project - The Simandou iron ore project in Guinea officially commenced operations on November 11, with a total investment exceeding $20 billion. The project includes over 600 kilometers of newly built multi-purpose railway and supporting port facilities, with an annual export capacity of up to 120 million tons [5][6] Section 3: Future Outlook - Looking ahead to 2026, the main trading theme in the steel sector may be "iron ore concessions + the realization of steel production cuts under anti-involution." The profit distribution in the black industry chain shows that iron ore occupies a significant share, indicating ample room for concessions. Major steel companies like Nanjing Steel, Hualing Steel, and Baosteel may see further performance elasticity due to cost relaxation and resilient steel sales prices [7][27]

Investment Rating - The report suggests a positive outlook for the steel industry, indicating a recovery in profitability and a focus on supply-side reforms [4][29]. Core Insights - The steel industry has shown significant improvement in profitability during the first three quarters of 2025, with total profits reaching 96 billion yuan, a year-on-year increase of 190% [4][6]. - The report highlights the implementation of supply-side reforms aimed at optimizing the structure of steel products and controlling production capacity [4][13]. - The demand for steel is expected to benefit from manufacturing upgrades and AI transformation, with a focus on high-end product development [4][29]. Summary by Sections 1. Industry Profit Recovery and Supply-Side Policies - In the first three quarters of 2025, the cumulative operating revenue of key steel enterprises was 4.56 trillion yuan, a year-on-year decrease of 2.36%, while total profits reached 96 billion yuan, marking a significant recovery [4][6]. - The production of crude steel was 746 million tons, down 2.9% year-on-year, while steel consumption fell by 5.7% [4][6]. - The report notes that the sales profit margin increased to 2.1%, up 1.39 percentage points year-on-year [4][6]. 2. Fund Holdings in the Steel Sector - As of September 30, 2025, the number of fund holdings in the steel sector increased to 41, with a total holding value of 21.99 billion yuan, up 22.44% year-on-year [4][17]. - The report indicates that the steel sector's holdings accounted for 0.50% of total fund holdings, with a notable increase in the number of holdings during the first and third quarters [4][17]. 3. Investment Recommendations - The report recommends focusing on leading companies in the ordinary steel sector that are expected to benefit from improved supply-demand dynamics, as well as companies in the special steel sector with strong fundamentals [4][29].

Investment Rating - The report maintains a positive outlook on the metals and new materials industry, indicating a high prosperity trend despite fluctuating interest rate expectations [3][4]. Core Views - The report highlights that the non-ferrous metals index outperformed the broader market indices, with significant year-to-date gains across various metal categories, particularly energy metals and precious metals [5][9]. - The report suggests that the recent interest rate cuts and ongoing geopolitical developments will continue to influence metal prices positively, particularly for gold and silver [4][22]. Weekly Market Review - The Shanghai Composite Index decreased by 0.18%, while the non-ferrous metals index increased by 1.07%, outperforming the CSI 300 by 2.15 percentage points [5]. - Year-to-date, the non-ferrous metals index has risen by 77.71%, significantly outperforming the CSI 300 by 60.09 percentage points [8]. Price Changes and Industry Key Companies Valuation - Precious metals saw a price increase, with gold prices rising by 1.91% and silver by 4.51% [14]. - The report provides detailed price changes for various metals, including copper, aluminum, and lithium, indicating a mixed performance with some metals experiencing price increases while others faced declines [15][17]. - Key companies in the industry are highlighted with their respective valuations, showing a range of price-to-earnings (PE) and price-to-book (PB) ratios, indicating potential investment opportunities [19][20]. Precious Metals - The report notes an increase in gold ETF holdings, reflecting growing investor confidence in gold as a safe-haven asset [22]. - The gold-silver ratio is reported at 78.3, suggesting potential shifts in demand dynamics between these two precious metals [23]. Industrial Metals - The report discusses the supply and demand dynamics for copper, noting a decrease in domestic social inventory and fluctuations in production rates [28]. - For aluminum, the report indicates an increase in downstream processing rates and a tightening supply-demand balance, suggesting a positive price outlook [42][44]. Small Metals - The report highlights the tight supply conditions for cobalt due to export restrictions from the Democratic Republic of Congo, while lithium prices continue to rise due to strong demand in energy storage [9][17].