Investment Rating - The investment rating for the non-ferrous metals industry is "Positive" (maintained) [5][10]. Core Viewpoints - The report highlights a "反内卷" (anti-involution) trend leading to a general increase in commodity prices, with specific catalysts such as policy expectations driving price movements in copper, aluminum, lithium, and cobalt [4][6][10]. Summary by Sections 1. Industry Overview - Important macroeconomic information includes the U.S. June core CPI being below expectations at 2.9%, and retail sales showing a month-on-month increase of 0.6% [10]. - The Ministry of Industry and Information Technology (MIIT) is set to release a growth stabilization plan for key industries including steel, non-ferrous metals, and petrochemicals [10]. 2. Industrial Metals 2.1 Copper - Copper prices are expected to rebound due to policy expectations, with LME copper prices increasing by 0.83% and SHFE copper prices slightly decreasing by 0.03% [6][25]. - Inventory levels have risen, with LME copper stocks increasing by 12.37% [22][25]. - Downstream demand is recovering, with copper rod operating rates at 74.2%, up by 7.2 percentage points [6]. 2.2 Aluminum - Aluminum prices are also expected to rise, with alumina prices increasing by 0.16% to 3165 CNY/ton [6][36]. - SHFE aluminum prices fell by 1.01% to 20500 CNY/ton, but are projected to recover due to strong policy support [6][36]. 2.3 Lead and Zinc - LME lead prices decreased by 1.38%, while SHFE lead prices fell by 1.70% [46]. - LME zinc prices increased by 1.24%, but SHFE zinc prices dropped by 0.45% [46]. 2.4 Tin and Nickel - LME tin prices fell by 0.73%, and SHFE tin prices decreased by 0.65% [60]. - LME nickel prices decreased by 0.33%, while SHFE nickel prices fell by 0.78% [60]. 3. Energy Metals 3.1 Lithium - Lithium prices are on the rise, with lithium carbonate increasing by 4.55% to 66650 CNY/ton, and lithium spodumene rising by 5.49% to 711 USD/ton [75]. - Supply issues are noted, with a slight increase in production but ongoing inventory accumulation [75]. 3.2 Cobalt - Cobalt prices are under pressure, with domestic cobalt prices down by 1.22% to 243000 CNY/ton [88]. - The Democratic Republic of Congo has extended its cobalt export ban by three months, which may lead to a price rebound in Q4 [88].

Core Viewpoint - The metal industry experienced a significant increase, with a rise of 2.10% on July 18, driven by strong capital inflow, particularly in the rare earth sector [2][3]. Market Performance - The Shanghai Composite Index rose by 0.50% on July 18, with 22 out of 28 sectors showing gains, led by the metal and basic chemical industries, which increased by 2.10% and 1.36% respectively [2]. - The electronic and media sectors faced declines, with drops of 0.49% and 0.98% respectively [2]. Capital Flow - The total net outflow of capital from the two markets was 229.87 billion yuan, with 10 sectors experiencing net inflows [2]. - The metal industry had the highest net capital inflow of 37.94 billion yuan, while the non-bank financial sector saw a modest inflow of 8.97 billion yuan [2]. Individual Stock Performance in Metal Industry - Out of 137 stocks in the metal sector, 107 stocks rose, with 5 hitting the daily limit up [3]. - The top three stocks with the highest net capital inflow were: - Northern Rare Earth: 2.10 billion yuan [3] - Dongfang Zircon: 434 million yuan [3] - Shengxin Lithium Energy: 327 million yuan [3]. - The stocks with the highest net outflow included: - Mingtai Aluminum: 115 million yuan [3] - Haixing Shares: 87 million yuan [3] - Zhongkuang Resources: 84 million yuan [3]. Capital Inflow and Outflow Rankings - The top stocks by capital inflow included: - Northern Rare Earth: 9.87% increase, 210.89 million yuan inflow [4] - Dongfang Zircon: 10.02% increase, 43.38 million yuan inflow [4] - Shengxin Lithium Energy: 10.00% increase, 32.65 million yuan inflow [4]. - The top stocks by capital outflow included: - Mingtai Aluminum: 0.81% increase, 115.29 million yuan outflow [6] - Haixing Shares: 10.03% increase, 87.20 million yuan outflow [6] - Zhongkuang Resources: 4.15% increase, 84.52 million yuan outflow [6].

Core Views - The report maintains a positive long-term outlook on gold, copper, and aluminum, emphasizing the importance of strategic metals [1][3] - In H1 2025, domestic economic indicators show signs of bottoming out, with improvements in real estate construction and a gradual shift towards new economic drivers [4][8] - The global economic landscape is being reshaped by fluctuating interest rate expectations from the Federal Reserve and the impacts of trade wars, leading to significant changes in resource sectors [4][8] Investment Strategies - **Main Line 1: Expansion on the Denominator Side - Gold and Silver**: Focus on gold and silver, with specific attention to the performance of gold stocks and the potential for silver due to its high price ratio to gold [4][5] - **Main Line 2: Improvement on the Numerator Side - Aluminum, Copper, Tin**: Anticipate continued high profitability in aluminum due to falling costs, while remaining cautious of potential short-term demand weakness [4][7] - **Main Line 3: Key Strategic Metals**: Highlighting opportunities in rare earths and other strategic metals amid US-China tensions, particularly in six key strategic metals [4][7] - **Main Line 4: Supply-Side Disruptions from Anti-Competition**: The report suggests that supply-side constraints in sectors like lithium carbonate may present attractive bottom-fishing opportunities [4][7] Market Performance - The CRB metal spot index increased by 7.08% from the beginning of 2025 to June 30, 2025, indicating a general upward trend in metal prices [9][10] - Gold prices surged by 23.93% during the same period, driven by expectations of a Federal Reserve rate cut [12][14] - Industrial metals, particularly tin and copper, saw significant price increases of 19.91% and 15.59% respectively, while zinc prices fell by 5.55% [16][19] Supply and Demand Dynamics - Global copper inventories saw a significant reduction, with LME copper stocks decreasing by 66.17% by June 30, 2025 [21][69] - The report anticipates limited growth in global copper supply due to insufficient capital expenditure in mining, projecting only a 2.3% increase in global copper production in 2025 [62][64] - The refined copper market is expected to remain slightly short, with a projected demand growth of 7.1% for 2025, supporting a high price center for copper [69] Sector Performance - The non-ferrous metal sector outperformed the broader market, with a cumulative increase of 19.17% from January to June 2025, compared to a 5.6% rise in the Shanghai Composite Index [38][40] - Sub-sectors such as tungsten, gold, and rare earths performed particularly well, with respective increases of 39.64%, 33.57%, and 31.88% [42][44] - Companies closely tied to resource price fluctuations, particularly in gold and rare earths, showed strong performance, while midstream processing companies faced challenges due to weak downstream demand [44]

Group 1 - The lithium mining sector experienced significant fluctuations on July 18, with companies like Shengxin Lithium Energy and Jinyuan Co. hitting the daily limit up, while others like Zhongmin Resources and Tianqi Lithium also saw notable gains [1][2] - The main driver behind this market movement was a sudden announcement from Zangge Mining, which stated that its subsidiary was ordered to halt lithium resource development activities due to compliance issues [3][7] - The announcement highlighted a tightening of local government regulations regarding lithium resource development, signaling potential challenges for the industry [7] Group 2 - Tianqi Lithium and Ganfeng Lithium, referred to as the "lithium mining twins," both released their half-year performance forecasts, with Tianqi expecting a net profit of 0 to 1.55 billion yuan, a significant recovery from a loss of 5.206 billion yuan in the same period last year [8] - Ganfeng Lithium, on the other hand, projected a net loss of 300 million to 550 million yuan, although this was an improvement from a loss of 760 million yuan in the previous year [8][9] - The differing strategies of the two companies in response to lithium price fluctuations were noted, with Tianqi adjusting its pricing mechanism to a monthly basis, while Ganfeng focused on expanding its battery business [10] Group 3 - The lithium carbonate market is currently facing an oversupply situation, with prices continuing to decline, which has led to inventory pressures [10] - Recent data indicated that the price of lithium carbonate futures had reached a new high of 70,980 yuan per ton, marking a 4.32% increase [2][11] - The supply-demand dynamics are shifting, with rising costs for lithium raw materials and a decrease in inventory levels, suggesting potential support for prices in the near term [11][12] Group 4 - Policy measures are being implemented to support the lithium carbonate market, including the elimination of inefficient production capacities and government stockpiling of industrial-grade lithium carbonate [12][13] - The overall sentiment in the market is currently characterized by a rebound phase driven by market emotions, although the reality of weak fundamentals may limit significant price increases [13]

Group 1 - The A-share small metal sector is experiencing a volatile rise, with Dongfang Zirconium hitting the daily limit and closing at a maximum increase [1] - Other companies such as Zhongmin Resources, Haotong Technology, Xiyu Co., Yongshan Lithium, Guiyan Platinum, and Western Materials are also seeing gains [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance forecast for the first half of 2025 indicates a significant decline in net profit due to falling lithium prices and expected losses in copper smelting, although there is potential for reduced losses in the upcoming quarters [7] - The report anticipates a recovery in net profit starting in 2026, driven by the ramp-up of copper and germanium production and stable growth in cesium and rubidium business [7] - The overall revenue is projected to increase significantly in the coming years, with a forecasted total revenue of 10.38 billion yuan by 2027, reflecting a growth rate of 47.40% [1][8] Financial Summary - Total revenue for 2023 is expected to be 6.013 billion yuan, with a year-on-year decrease of 25.22%. The forecast for 2024 is 5.364 billion yuan, a further decline of 10.80%, followed by a recovery to 6.521 billion yuan in 2025 [1][8] - The net profit attributable to the parent company is projected to drop to 400.28 million yuan in 2025, a decrease of 47.12% compared to the previous year, before rebounding to 1.933 billion yuan by 2027 [1][8] - The earnings per share (EPS) is expected to decline to 0.55 yuan in 2025, with a recovery to 2.68 yuan by 2027 [1][8] - The price-to-earnings (P/E) ratio is projected to be 60.08 in 2025, decreasing to 12.44 by 2027, indicating an improvement in valuation as earnings recover [1][8]

[Core Performance Forecast Data](index=1&type=section&id=%E4%B8%80%E3%80%81%E6%9C%AC%E6%9C%9F%E4%B8%9A%E7%BB%A9%E9%A2%84%E8%AE%A1%E6%83%85%E5%86%B5) The company projects a significant year-over-year decline in 2025 H1 net profit, with attributable net profit decreasing by 80.97-86.26% and non-recurring net profit by 96.63-98.88% 2025 Semi-Annual Performance Forecast | Item | Current Period (Jan 1 - Jun 30, 2025) | Prior Period | | :--- | :--- | :--- | | **Net Profit Attributable to Shareholders** | Profit: CNY 65 million – CNY 90 million | Profit: CNY 472.9916 million | | YoY Change | **Decrease 86.26% - 80.97%** | - | | **Net Profit Excluding Non-Recurring Items** | Profit: CNY 5 million – CNY 15 million | Profit: CNY 444.9154 million | | YoY Change | **Decrease 98.88% - 96.63%** | - | | **Basic Earnings Per Share** | Profit: CNY 0.0901/share – CNY 0.1247/share | Profit: CNY 0.6556/share | [Performance Attribution Analysis by Business Segment](index=1&type=section&id=%E4%B8%89%E3%80%81%E4%B8%9A%E7%BB%A9%E5%8F%98%E5%8A%A8%E5%8E%9F%E5%9B%A0%E8%AF%B4%E6%98%8E) Overall performance declined due to lithium salt and copper smelting, partially offset by strong growth in rare light metals (cesium, rubidium) business [Rare Light Metals (Cesium, Rubidium) Business: Stable Growth Pillar](index=1&type=section&id=%E4%B8%89%E3%80%81%E4%B8%9A%E7%BB%A9%E5%8F%98%E5%8A%A8%E5%8E%9F%E5%9B%A0%E8%AF%B4%E6%98%8E-1) The core rare light metals (cesium, rubidium) business maintained strong growth and profitability, with revenue and gross profit increasing over 40% year-over-year Rare Light Metals Business H1 2025 Performance | Metric | Amount (CNY) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | Approx. 710 million | Approx. 50.88% | | Gross Profit | Approx. 490 million | Approx. 43.78% | - This business segment demonstrates core competitiveness, maintaining strong growth and profitability, serving as a crucial support for the company's performance[6](index=6&type=chunk) [Lithium Salt Business: Volume Up, Price Down, Profitability Under Pressure](index=1&type=section&id=%E4%B8%89%E3%80%81%E4%B8%9A%E7%BB%A9%E5%8F%98%E5%8A%A8%E5%8E%9F%E5%9B%A0%E8%AF%B4%E6%98%8E-2) Lithium salt business profitability was pressured by significant market price declines, despite a 5.95% increase in sales volume - In H1 2025, proprietary lithium salt product sales volume reached approximately **17,800 tons**, a year-over-year increase of approximately **5.95%**[6](index=6&type=chunk) - Due to market fluctuations in the lithium battery new energy sector, lithium salt product market prices experienced a significant year-over-year decline, substantially impacting this segment's sales revenue and gross margin[6](index=6&type=chunk)[7](index=7&type=chunk) [Copper Smelting Business: Temporary Losses and Strategic Adjustments](index=2&type=section&id=%E4%B8%89%E3%80%81%E4%B8%9A%E7%BB%A9%E5%8F%98%E5%8A%A8%E5%8E%9F%E5%9B%A0%E8%AF%B4%E6%98%8E-3) Copper smelting in Namibia incurred CNY 200 million net losses due to declining processing fees, prompting plans to cease operations and develop germanium business - The copper smelting business at the Tsumeb smelter in Namibia resulted in a net profit loss of approximately **CNY 200 million** during the reporting period[7](index=7&type=chunk) - The loss is primarily attributed to tight global copper concentrate supply, leading to a significant decline in industry processing fees (TC/RC)[7](index=7&type=chunk) - Mitigation measures include cost reduction initiatives, prompt shutdown of copper smelting production lines, and developing germanium business capacity to create new profit growth[7](index=7&type=chunk) [Other Notes and Risk Warnings](index=1&type=section&id=%E4%BA%8C%E3%80%81%E4%B8%8E%E4%BC%9A%E8%AE%A1%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80%E6%B2%9F%E9%80%9A%E6%83%85%E5%86%B5%E5%8F%8A%E5%9B%9B%E3%80%81%E5%85%B6%E4%BB%96%E7%9B%B8%E5%85%B3%E8%AF%B4%E6%98%8E) This unaudited performance forecast, based on preliminary internal estimates, will be finalized in the 2025 semi-annual report, cautioning investors about inherent investment risks - The financial data related to this performance forecast has not been audited by an accounting firm[5](index=5&type=chunk) - This performance forecast data represents preliminary estimates by the company's financial management department; final figures will be subject to the 2025 semi-annual report, and investors are advised to exercise caution regarding investment risks[8](index=8&type=chunk)

Investment Rating - Industry rating: Recommended [3] Core Insights - The U.S. Department of Defense (DoD) has invested billions in MP Materials to accelerate the independence of U.S. rare earth magnets, but global production remains highly concentrated in China in the short term [9][14][45] - Nickel prices have decreased due to a significant drop in demand and production halts in Indonesia, which may impact local mining operations [12][20][23] - Cobalt prices have risen due to supply tightening from the Democratic Republic of Congo, which accounts for approximately 75% of global electric vehicle battery supply [13][31] - Lithium carbonate prices have increased, but future price movements will depend on downstream demand recovery [7][38][44] - Antimony prices have remained stable, with domestic supply still tight, and production expected to decline in the coming months [32][36] Summary by Sections Rare Earth Industry - MP Materials announced a partnership with the DoD to enhance domestic production capabilities, with a new magnet manufacturing facility expected to be operational by 2028 [45][46] - The DoD has committed to a minimum price of $110 per kilogram for NdPr products, ensuring stable cash flow for MP Materials [46][47] Nickel Industry - As of July 11, LME nickel spot price was $14,955 per ton, down 1.09% from July 4, with total LME nickel inventory increasing by 1.83% [20] - Domestic NPI smelting costs remain under pressure, affecting the acceptance of high-priced raw materials [20][23] Cobalt Industry - As of July 11, cobalt prices have shown mixed trends, with electrolytic cobalt at 249,300 yuan per ton, down 0.99%, while cobalt oxide increased by 1.54% [24][31] - The extension of a temporary export ban by the Congolese government is expected to tighten global cobalt supply [31] Lithium Industry - The average price of battery-grade lithium carbonate reached 63,800 yuan per ton, up 2.36% as of July 11 [7][38] - Market sentiment is cautious, with inventory levels remaining high, limiting upward price movement [38][44] Antimony Industry - Domestic antimony ingot prices have stabilized, with supply constraints expected to support future pricing [32][36]

Group 1 - The report highlights a steady increase in domestic electrification rates and a strong recovery in European sales, with global sales expected to grow by 21% in 2025 and maintain over 15% growth in 2026 [2][3] - In 2025, domestic electric vehicle sales are projected to reach 5.61 million units, a year-on-year increase of 44%, with an annual growth forecast of 25% [2][5] - The report anticipates a robust demand for lithium batteries, with a revised growth estimate of over 30% in 2025 and nearly 20% in 2026, driven by strong energy storage policies and market dynamics [2][3] Group 2 - The report indicates that the profitability of the industry has begun to recover slightly, with leading companies starting to expand production in an orderly manner, while smaller firms continue to exit the market [2][3] - The report notes a significant disparity in profitability across different segments of the supply chain, with leading battery manufacturers maintaining high profit levels compared to second-tier manufacturers [2][3] - The solid-state battery technology is highlighted as a key area of focus, with advancements expected in sulfide-based materials and core equipment, indicating a rapid acceleration in industrialization [2][3] Group 3 - Investment recommendations emphasize focusing on leading lithium battery companies and those accelerating the industrialization of solid-state technologies, with specific companies identified for potential investment [2][3] - The report suggests that the lithium carbonate price has reached a bottom, making it favorable to invest in companies with quality resources [2][3] - The report identifies several companies in the solid-state battery sector that are expected to benefit from technological advancements and market demand [2][3]

Group 1: Liquidity and Scale of Rare Metal ETFs - The rare metal ETF had an intraday turnover of 3.5%, with a transaction volume of 30.73 million yuan [3] - Over the past week, the average daily transaction volume of the rare metal ETF reached 37.71 million yuan, ranking first among comparable funds [3] - In the past year, the rare metal ETF's scale increased by 16.82 million yuan, also ranking first among comparable funds [3] - The latest margin buying amount for the rare metal ETF reached 2.08 million yuan, with a margin balance of 21.28 million yuan [3] Group 2: Performance and Returns - As of July 10, the net value of the rare metal ETF increased by 30.36% over the past year [3] - The highest monthly return since inception was 24.02%, with the longest consecutive monthly gains being 3 months and the longest gain percentage being 14.06% [3] - The average return during the rising months was 7.76% [3] Group 3: Industry Insights and Recommendations - The lithium sector is currently in a bottom oscillation phase, with solid-state battery industrialization accelerating and energy storage demand expected to surge [3] - The new energy storage installations are projected to grow by 140% year-on-year in 2024, which may serve as a core catalyst [3] - Companies with strong cost control in lithium extraction from salt lakes and those with overseas resource layouts are recommended for attention [3] Group 4: Rare Earth Market Dynamics - The implementation of the Rare Earth Management Regulations is expected to enhance compliance capacity concentration, with a growth rate of 5.9% in 2024 [4] - The supply-demand gap for praseodymium and neodymium oxide is anticipated to widen starting in 2025, with a focus on light rare earth leading enterprises [4] - The strategic position of rare earths is significant due to U.S. tariff policies, which may positively impact company performance [4] Group 5: Key Stocks in Rare Metal Sector - The top ten weighted stocks in the CSI Rare Metal Theme Index include Salt Lake Co., Northern Rare Earth, Luoyang Molybdenum, and others, accounting for 54.07% of the total weight [4] - Notable stock performances include Northern Rare Earth with a 9.85% increase and Salt Lake Co. with a 0.86% increase [6] Group 6: Investment Opportunities - Investors can also participate in the rare metal sector through the Rare Metal ETF linked fund (014111) [7]