Investment Rating - The report maintains a "Buy" recommendation for several steel companies, including Baosteel, Hualing Steel, and Nanjing Steel, among others [3][4]. Core Viewpoints - The upcoming "stability growth plan" from the Ministry of Industry and Information Technology is expected to optimize steel production capacity, focusing on structural adjustments and the elimination of outdated capacity [3][7]. - Steel prices have shown an upward trend, with specific prices for various steel products increasing as of July 18, 2025 [1][10]. - The report indicates a decrease in steel production and inventory levels, with a total production of 8.68 million tons for the five major steel products, reflecting a week-on-week decrease [2][8]. Summary by Sections Price Trends - As of July 18, 2025, the price of 20mm HRB400 rebar in Shanghai is 3,270 CNY/ton, up 30 CNY/ton from the previous week [1][10]. - Other steel products also saw price increases, including hot-rolled and cold-rolled steel [1][11]. Production and Inventory - The total production of the five major steel products is 8.68 million tons, down 45,300 tons week-on-week [2][8]. - Social inventory of the five major steel products increased by 81,500 tons to 9.21 million tons, while steel mill inventory decreased by 100,200 tons [2][8]. Profitability - The report notes fluctuations in steel profitability, with rebar, hot-rolled, and cold-rolled steel margins changing by -19 CNY/ton, -7 CNY/ton, and +7 CNY/ton respectively [1][3]. Investment Recommendations - The report recommends several companies for investment, including Baosteel, Hualing Steel, and Nanjing Steel in the flat steel sector, and Xianglou New Materials and CITIC Special Steel in the special steel sector [3][4].

Core Viewpoint - The profitability of Chinese steel companies is significantly lower than that of Japanese steel companies, with the CEO of Nippon Steel highlighting the challenges faced by Chinese manufacturers due to low pricing strategies [1][2]. Financial Performance Comparison - In 2024, Nippon Steel's net profit was 350.2 billion yen (approximately 16.9 billion RMB), while the top five Chinese steel companies had net profits of 7.362 billion RMB (Baowu Steel), 5.126 billion RMB (CITIC Special Steel), 2.261 billion RMB (Nanjing Steel), 2.032 billion RMB (Hualing Steel), and 1.49 billion RMB (Jiuli Special Materials) [1][2]. - The combined net profit of the top four Chinese steel companies in 2024 was less than that of Nippon Steel alone [2]. Industry Challenges - The Chinese steel industry is facing overcapacity, price competition, and increasing technical standards, leading to a decline in profitability [2][6]. - In 2024, the total profit of key Chinese steel companies was 42.9 billion RMB, a year-on-year decrease of 50.3% [6][7]. - The apparent consumption of crude steel in China has decreased from 1.048 billion tons in 2020 to 892 million tons in 2024, indicating a significant drop in demand [8]. Export Dynamics - Despite increasing steel exports, the average export price has declined, with the volume of steel exports doubling from 53.67 million tons in 2020 to 111 million tons in 2024, while the average price fell from 847.2 USD/ton to 755 USD/ton [9][10]. - Trade protectionism against Chinese steel products is rising, with multiple anti-dumping investigations initiated by countries like Vietnam and South Korea [9][10]. Strategic Adjustments - Chinese steel companies are attempting to improve their competitiveness by focusing on high-end steel production and reducing costs through better management practices [13][14]. - The industry is urged to adopt a more flexible production mechanism to balance supply and demand, especially in light of declining domestic demand and increasing export challenges [15].

Group 1: Event Overview - The third China International Supply Chain Promotion Expo was held in Beijing from July 16 to 20, attracting 651 enterprises from 75 countries and regions [1] - The expo focused on smart manufacturing, green transformation, and multinational collaboration, aiming to inject new momentum into the stability and development of global supply chains [1] Group 2: Company Highlights - Honeywell showcased over 95% of its physical exhibits developed by its local team in China, launching smart ship solutions and efficient operation modules for smart building management [1] - HP emphasized its deep integration into the Chinese industrial chain, showcasing AI-driven manufacturing solutions and a full lifecycle support model for various industries [2] - Maersk introduced integrated solutions for sea, air, and land transport, achieving over 90% on-time delivery rates in its shipping operations [3] - Corning presented its material science innovations and commitment to long-term investment in China, highlighting its contributions to the supply chain [4] - Panasonic displayed innovative solutions for urban living, emphasizing its commitment to supply chain innovation and collaboration [5] - Golden Agri-Resources launched a global electronic catalog and showcased sustainable packaging solutions, reinforcing its role in the green supply chain [6] - Siemens presented a comprehensive solution for enterprises going global, leveraging its extensive ecosystem and digital technologies [7] - Rio Tinto and China Baowu Steel Group focused on green supply chains and global industry cooperation, showcasing key materials for energy transition [8]

Core Insights - The competitive landscape between Japanese and Chinese steel companies is influenced by structural overcapacity in China's steel industry, low concentration levels, and continuous technological advancements [1][2] - Japanese steel company Nippon Steel has significantly higher profits compared to Chinese counterparts, with its net profit for 2024 at 350.2 billion yen (approximately 16.9 billion yuan), while the top five Chinese steel companies collectively earned less [1][3] - The profitability gap is attributed to Nippon Steel's advantages in raw material costs and product structure, focusing on high-end steel production [3][4] Industry Overview - The Chinese steel industry is facing a structural overcapacity issue, with a concentration rate of only 40% among the top ten steel companies, leading to intense competition and price wars [4][5] - In 2024, the total profit of key Chinese steel enterprises dropped by 50.3% year-on-year, with Baosteel's net profit declining by 38.36% [5][6] - China's crude steel apparent consumption has decreased from a peak of 1.048 billion tons in 2020 to 892 million tons in 2024, indicating a downward trend in demand [6][7] Export Dynamics - Despite increasing steel exports, the average export price has fallen from $847.2 per ton in 2020 to $755 per ton in 2024, reflecting a challenging international market [7][8] - Trade protectionism against Chinese steel products has risen, with 33 anti-dumping investigations initiated in 2024 alone, surpassing the total from 2020 to 2023 [7][8] - Major export destinations for Chinese steel include Vietnam and South Korea, accounting for 11.5% and 7.4% of total exports, respectively [8][9] Technological Advancements - Chinese steel companies are increasingly focusing on technological innovation and product upgrades, with significant developments in high-strength and specialized steel products [11][12] - The industry is urged to shift from scale expansion to enhancing research and development capabilities, with some companies achieving breakthroughs in high-end steel products [11][12] - The Chinese Steel Industry Association plans to implement a new capacity governance mechanism to balance supply and demand effectively [12]

Global Steel Production Overview - In 2024, global crude steel production reached 1.885 billion tons, a decrease of 1% year-on-year [1] - China remains the largest steel producer, with a projected output of 1.005 billion tons in 2024, accounting for 53.3% of global production [1] - Other major producers include India (149.4 million tons), Japan (84 million tons), the United States (79.5 million tons), and Russia (71 million tons) [1] Top Steel Producers - The top 50 steel companies produced a total of 1.118 billion tons in 2024, an increase of 1% year-on-year, with the entry threshold rising from 7.45 million tons to 8.54 million tons [3] - China has 28 companies in the top 50, maintaining a dominant position, while the United States has 4, and India and Russia each have 3 [3] - China Baowu Steel Group leads the ranking with a production of 130 million tons, remaining stable compared to the previous year [7] Notable Company Performances - Ansteel Group ranked third with a crude steel output of 59.55 million tons, an increase of 6.5% year-on-year [5] - ArcelorMittal, based in Luxembourg, is the second-largest producer, with a production decline of 5.1% to 65 million tons [5] - Hebei Province, home to the leading Hebei Iron and Steel Group, produced 199.86 million tons, accounting for about 20% of China's total output [3] Financial Performance - China Baowu reported revenues of 900.2 billion yuan and a net profit of 13.57 billion yuan, reflecting declines of 19.12% and 43% respectively [7] - The restructuring of Ansteel and Benxi Steel has positioned it as the second-largest steel producer in China and third globally [5]

Core Insights - The third China International Supply Chain Promotion Expo showcased over 30 companies and institutions demonstrating key technologies and products in the automotive industry, highlighting collaborative innovation and development within the supply chain [1][2]. Group 1: Company Innovations - Baosteel presented its latest fifth-generation platformized and integrated pure electric vehicle body, aiming to transition from a raw material supplier to a solution provider [1]. - The company emphasized early-stage collaboration with automotive manufacturers to optimize materials based on cost, weight, and carbon emission targets during vehicle design [1]. - Hunan Shibite Robot Co., Ltd. showcased its self-developed automotive paint defect detection technology, reflecting advancements in quality assurance within the automotive supply chain [2][6]. Group 2: Supply Chain Collaboration - The expo highlighted the importance of open cooperation and collaborative development in the automotive industry, with companies like Rio Tinto and Baosteel demonstrating integrated supply chain solutions from raw materials to vehicle bodies [2]. - The introduction of the "factory within a factory" model by Seres Group allows for localized production and supply, significantly enhancing production efficiency [4]. - Tesla's local supply chain achievements were showcased, with over 95% localization of components and a vehicle rolling off the Shanghai factory every 30 seconds [4]. Group 3: Technological Advancements - Tesla also displayed a humanoid robot that utilizes electric vehicle technology, indicating the potential for expanded applications of EV technology [5]. - Black Sesame Intelligent Technology Co., Ltd. presented various chips focused on advanced driving assistance and cross-domain computing, which can also be applied in humanoid robots [5]. - Aibiai and New Materials Co., Ltd. introduced aerogel products for automotive battery thermal protection, which currently account for 80% of their revenue, while also exploring broader applications in construction and industry [7].

Group 1 - The third China International Supply Chain Promotion Expo is ongoing, with over 230 new exhibitors participating alongside returning companies, highlighting its role as an important international platform for maintaining global supply chain stability [1][2] - Companies like Rio Tinto and GE Healthcare are showcasing their collaborative efforts and innovations in supply chain solutions, emphasizing the importance of partnerships in achieving sustainable development and technological advancements [1][2] - The expo aims to foster long-term mutually beneficial cooperation rather than short-term transactions, promoting a collaborative environment among exhibitors [3] Group 2 - New participants such as PwC and Schneider Electric are leveraging the expo to share experiences and seek partnerships, focusing on green supply chain practices and advanced manufacturing solutions [2] - The expo is evolving into a 3.0 version of its "finding friends" model, utilizing big data and AI to enhance business matchmaking and collaboration opportunities [3] - The event emphasizes the importance of resource optimization and collaboration among quality enterprises, regardless of their position in the supply chain [3]

Investment Rating - The report maintains an "Overweight" rating for the steel and non-ferrous metal industries [1] Core Viewpoints - The supply-side reform in China is expected to break the deflationary cycle and create investment opportunities in the steel and non-ferrous metal sectors [1][6] - The report emphasizes the importance of "supply constraints" to manage the supply-demand balance and mitigate economic downturn risks [6][12] - The steel industry is facing severe overcapacity, with state-owned enterprises holding a significant market share, which facilitates the implementation of administrative measures to control production [6][28] Summary by Sections 1. Supply-Side Reform and Economic Management - The socialist market economy in China allows for effective macroeconomic control, contrasting with the cyclical issues faced in capitalist economies [12][13] - Historical experiences show that demand stimulus alone is insufficient to resolve deep-seated deflationary pressures [14][15] - The supply-side reform initiated in 2016 has proven successful in stabilizing prices and improving corporate profitability [21][22] 2. Steel Industry Analysis - The steel industry has been in a state of oversupply from 2007 to 2024, with crude steel production increasing from 490 million tons to 1.01 billion tons, while apparent consumption has not kept pace [28][29] - The production capacity utilization rates for rebar and wire rod are expected to decline from around 70% to 50% due to weak real estate demand [33][34] - The concentration of production among state-owned enterprises is high, with central state-owned enterprises accounting for approximately 63% of total production in 2024 [38][39] 3. Investment Recommendations - The report suggests focusing on three categories of investment targets: profit recovery, stable profit with valuation repair, and stable high-dividend stocks [51] - Specific companies recommended for profit recovery include Liugang Co., Taigang Stainless Steel, and Shandong Iron and Steel, with projected annualized PE ratios improving significantly under favorable conditions [51]

Core Viewpoint - The third China International Supply Chain Promotion Expo showcases collaboration between global mining giant Rio Tinto and China's largest steel producer, China Baowu Steel Group, focusing on innovative materials for the automotive industry and low-carbon solutions for electric vehicles [2][3][4]. Group 1: Company Collaborations - Rio Tinto and China Baowu are jointly presenting their latest iron ore project, the West Pit Iron Mine in Western Australia, which has a total investment of $2 billion and an annual production capacity of 25 million tons [3]. - The West Pit project is a continuation of the joint venture between Rio Tinto and China Baowu, with Rio Tinto holding a 54% stake and China Baowu holding 46% [3]. - The companies are also showcasing progress on the SimFer project in Guinea, with expected iron ore shipments starting in November 2025, and an estimated annual shipment volume of 500,000 to 1 million tons [3]. Group 2: Product Innovations - Rio Tinto is highlighting its innovative multi-material solutions, including iron, copper, aluminum, and lithium, which are essential for energy transition applications such as electric vehicles and energy storage systems [2]. - China Baowu is presenting its fifth-generation platform-based, integrated pure electric vehicle body solution, BCB EV® Meta, which aims to achieve lower carbon emissions while meeting higher safety standards for electric vehicles [3]. Group 3: Industry Trends - The CEO of Rio Tinto's China division emphasizes the importance of building a low-carbon, resilient, and inclusive supply chain, with China playing a crucial role in global manufacturing and low-carbon transition [4].

Overview - The metallurgical industry in China is focusing on energy conservation and emission reduction, aiming to minimize energy consumption and pollutant emissions while ensuring product quality and output [1][9][21] - In 2024, total investment in energy conservation and emission reduction by metallurgical enterprises is projected to decrease to 42 billion yuan, with energy-saving benefits dropping to 13 billion yuan [11] Market Policies - The Chinese government has implemented a series of policies to promote energy conservation and carbon reduction in the metallurgical industry, including action plans and guidelines aimed at reducing energy consumption and carbon emissions [4][6] - Specific targets for comprehensive energy consumption and carbon emission intensity in the steel industry have been established to guide the development of energy conservation and emission reduction efforts [4][6] Industry Chain - The energy conservation and emission reduction industry in metallurgy includes manufacturers of energy-saving equipment, technology providers, and software service providers [7] - The upstream supply chain consists of raw material suppliers, component manufacturers, and research institutions, while the downstream market primarily targets the steel and non-ferrous metal industries [7] Current Development - In 2023, the metallurgical industry consumed 680 million tons of standard coal and emitted 1.98 billion tons of CO2, with significant reductions expected in 2024 due to policy support [9][11] - The environmental cost per ton of steel is approximately 138 yuan, with carbon trading revenues estimated at 3.5 billion yuan [11] Competitive Landscape - Major players in the industry include large metallurgical groups like Baowu Steel and Hebei Iron and Steel, which are leading the development of energy-saving technologies [13][16] - Specialized energy-saving technology companies, such as China Metallurgical Group, focus on specific areas like waste heat recovery and flue gas purification [13][18] Future Trends - The dual carbon goals and related policies will continue to drive the metallurgical industry towards stricter energy consumption and emission standards [21] - The adoption of electric furnace short-process steelmaking technology is expected to increase, gradually shifting the industry away from traditional long-process methods [21]