Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: The conference call primarily discusses the **basic materials sector** in China, particularly focusing on **coal**, **steel**, **cement**, and **lithium** in the context of China's **anti-involution policy** [5][12]. Core Insights and Arguments - **Anti-Involution Policy**: This policy aims to rectify low-price and disorderly competition, eliminate outdated capacity, and create a unified national market. It emphasizes sectors like **electric vehicles (EV)**, **solar**, and **e-commerce**, while focusing on **lithium** and **coal** in basic materials [5][12]. - **Coal Inspections**: The National Energy Administration (NEA) is inspecting coal mines in eight provinces to address overproduction. The impact is more significant in **metallurgical coal** (26% volume impact) compared to **thermal coal** (3% volume impact). Production cuts are anticipated, but execution remains uncertain [6][14]. - **Price Projections**: - **Met Coal**: Prices are expected to average around **RMB 1,200/ton** with potential curtailments [6][14]. - **Thermal Coal**: Prices may recover to **RMB 670/ton** during summer but are expected to soften in Q4, averaging **RMB 630/ton** in 2025 [14]. - **Steel Sector**: Steel is considered a lower priority in the anti-involution campaign due to previous successful reforms. Steel output has already declined by **7-9% year-on-year** in May-June [7][14]. Additional Important Insights - **Hydropower Project Impact**: The Yarlung Zangbo hydropower project, costing **RMB 1.2 trillion**, is expected to consume **4.3 million tons per annum (mtpa)** of cement and **0.6 mtpa** of steel, which is not anticipated to significantly impact overall commodity consumption [10][12]. - **Iron Ore Market**: Iron ore prices have increased from **$93/ton** to **$103/ton** due to expectations of property stimulus and supply reform. Steel production in China has slowed, and exports remain strong at **~112 million tons** in June [11][12]. - **Inventory Levels**: Both thermal and metallurgical coal inventories are healthier compared to earlier in 2025, with thermal coal inventories at Independent Power Producers (IPPs) remaining elevated [14]. Conclusion - The conference call provided a comprehensive overview of the implications of China's anti-involution policy on the basic materials sector, particularly coal and steel. The anticipated production cuts and price adjustments reflect the government's efforts to stabilize the market while addressing overproduction issues. The impact of new infrastructure projects on commodity demand appears limited, and the overall sentiment in the iron ore market remains cautiously optimistic.

Group 1: Report's Investment Rating - There is no information about the industry investment rating in the report. Group 2: Core Views of the Report - In Q2 2025, the production and transportation volume of the four major iron ore mines increased significantly, with a year - on - year growth of 3.5% and a quarter - on - quarter increase of nearly 20%, basically catching up to last year's level in the first half of the year [1][5]. - The trend of "increase in mainstream mines and decrease in non - mainstream mines" was further reflected in Q2, and the dominant position of mainstream mines in Australia and Brazil in the global seaborne iron ore market may be further strengthened [2][44]. Group 3: Summary of Each Section 1. Overview of the Four Major Mines' Q2 2025 Operations - The total production/transportation volume of the four major mines in Q2 2025 was 293 million tons, with a year - on - year increase of 3.5% and a quarter - on - quarter increase of nearly 20%. The significant volume boost by BHP and Fortescue in June was the main driver of the excellent performance in Q2 [1][5]. - In the first half of 2025, only Rio Tinto's production was still significantly behind last year's level. BHP and Fortescue both raised their production and transportation targets for FY26, indicating confidence in their supply chain efficiency and new production capacity [6]. 2. Key Points of the Four Major Mines' Quarterly Reports 2.1 Vale - **Overall Situation**: In Q2, Vale's iron ore production was 83.599 million tons, a year - on - year increase of 3.7%. Sales volume was 77.346 million tons, a year - on - year decrease of 3.1%. The C1 cash cost was 22.2 US dollars/wet ton, a year - on - year decrease of 10.8%. The AIC was 55.3 US dollars/wet ton, a year - on - year decrease of 9.6% [8][12][13]. - **Operation Details**: The northern system's Q2 production reached 41.222 million tons, a record high since 2021. The southeast system performed well, with the fourth processing line of Brucutu driving production to a new high. The southern system's production declined due to construction issues. The company plans to conduct maintenance on the São Luis pellet plant in Q3. Pellet sales in Q2 were about 7.5 million tons, a year - on - year decrease of 16% [15][16][19]. 2.2 Rio Tinto - **Overall Situation**: In Q2, Rio Tinto's Pilbara mine production was 83.743 million tons, a year - on - year increase of 5.4%, reaching a new high since 2018. The shipping volume was 79.887 million tons, a year - on - year decrease of 0.5%. The company maintained its Pilbara shipping volume guidance range of 323 - 338 million tons but expected the actual volume to be closer to the lower limit [22][23]. - **Operation Details**: The Western Range project was put into production in March and is expected to reach full production by the end of 2025. The Brockman Syncline 1 project is planned to be put into production in 2027, and the Hope Downs - 2 project started construction in June. The first shipment of the Guinea Simandou iron ore project is still expected in November, with an estimated shipment of 50 - 100 million tons in 2025 [25][27]. 2.3 BHP - **Overall Situation**: In Q2, BHP's equity production was 70.339 million tons, a year - on - year increase of 1.6%. Sales volume was 69.843 million tons, a year - on - year increase of 2.2%. In FY2025, the full - year equity production was about 263 million tons, higher than the previous guidance range. The company announced an upward - adjusted equity production guidance range of 258 - 269 million tons for FY2026 [31][32]. - **Operation Details**: In the Western Australia WAIO mine, the improvement of logistics efficiency and the full - production of the South Slope project contributed to the production increase. In the Brazilian Samarco, the production continued to rise with the help of the capacity ramp - up of the No. 2 concentrator [34][35]. 2.4 Fortescue - **Overall Situation**: In Q2, the company's iron ore shipping volume was 55.2 million tons, a year - on - year increase of 2.8%. In FY2025, the full - year shipping volume was 198.4 million tons, a year - on - year increase of 3.5%. The C1 cost of Pilbara hematite in Q2 was 16.29 US dollars/wet ton, a quarter - on - quarter decrease of 7.1%. The company announced a shipping volume guidance range of 195 - 205 million tons and a C1 cost guidance range of 17.50 - 18.50 US dollars/wet ton for FY2026 [37][38]. - **Operation Details**: The shipping volume of the Iron Bridge project in Q2 was 2.4 million tons, and the full - year volume in FY2025 was 7.1 million tons. The company aims to reach full production of 22 million tons/year in FY2028 [41]. 3. Summary and Future Outlook - In Q2, the four major mines made efforts to increase production. Rio Tinto and Vale contributed over 7 million tons of year - on - year incremental production. - The trend of "increase in mainstream mines and decrease in non - mainstream mines" was further strengthened. From January to June 2025, the global seaborne iron ore shipment volume decreased slightly year - on - year, while the shipments from Australia and Brazil increased, and their share in the global market reached 83.3% [44].

Group 1: Report's Investment Rating - No information provided Group 2: Core Views of the Report - In the first half of the year, global iron ore shipments decreased by 0.96% year-on-year. Australian and Brazilian shipments were affected by weather in Q1 and increased in Q2. Non-Australian and non-Brazilian shipments decreased significantly year-on-year, and non-mainstream shipments were more affected by ore prices compared to mainstream shipments from Australia and Brazil [2]. - It is expected that the output and shipments of the four major mines will increase in the second half of the year. Rio Tinto and Vale's output/shipments in the first half of the year did not reach half of their guidance targets, while FMG and BHP raised their guidance targets for fiscal year 2026 [2]. - The main contradiction in the black sector lies in the terminal demand for steel, which depends on policy support. The bargaining power of imported iron ore is relatively strong. It is expected that the downside space for iron ore in the second half of the year is limited, and the upside space depends on the trend of steel prices [2]. Group 3: Summary by Relevant Catalogs 1. Iron ore shipments in the first half of the year - In H1 2025, the cumulative global iron ore shipments were 778 million tons, a year-on-year decrease of 0.96%. Affected by cyclones in Australia and rainfall in Brazil in Q1, the cumulative shipments were 362 million tons, a year-on-year decrease of 3.39%. In Q2, shipments increased to make up for the previous shortfall and due to the end - of - quarter rush by Australian mines [3]. - From the source of shipments, the total shipments from Australia and Brazil in H1 were 648 million tons, accounting for 83% of global shipments, with a year-on-year increase of 0.84%. Non-Australian and non-Brazilian shipments were only 130 million tons, a year-on-year decrease of 9.09%. Iron ore prices have a greater impact on non-Australian and non-Brazilian shipments, and Australian and Brazilian shipments show obvious seasonal patterns [5]. 2. Expected increase in shipments of the four major mines in the second half of the year 2.1 Supply summary in the first half of the year - According to SteelHome data, the cumulative shipments of the four major mines in H1 2025 were 529 million tons, a year-on-year increase of 0.29%. Structurally, Rio Tinto and BHP's shipments decreased, FMG's shipments increased significantly, and Vale's shipments increased steadily [6]. - Rio Tinto's 2025 production guidance target remained unchanged. Affected by cyclones and capacity replacement in Q1, its H1 shipments decreased by 5% year-on-year. The Pilbara mine achieved its highest Q2 output since 2018, and the first shipment of iron ore from the Simandou project was advanced to around November 2025. The品位 of PB mixed ore decreased [8][11]. - FMG's Q2 output and shipments increased significantly quarter-on-quarter. In fiscal year 2025, it shipped 198 million tons of iron ore, a year-on-year increase of 4%, achieving its fiscal year target. It raised its 2026 fiscal year guidance target by 5 million tons to 195 - 205 million tons [12][13]. - BHP's Q2 2025 output was 77 million tons, and its fiscal year 2025 output was 290 million tons, a year-on-year increase of 1%. It raised its 2026 fiscal year guidance target by 2 million tons. It increased shipments in Q2 by optimizing operations [14][15]. - Vale's Q2 output was 83.6 million tons, a significant increase, mainly due to the strong performance of the Southeast and Northern systems. It adjusted its 2025 iron ore pellet target output downwards by 7 million tons due to weak demand [16][18]. 2.2 Supply outlook in the second half of the year - It is expected that the iron ore shipments of the four major mines will increase in the second half of the year. Rio Tinto is expected to speed up production and shipments, with the Xipo and Simandou projects as key sources of growth. FMG is expected to have some room for shipment growth. BHP's output and shipments are expected to remain sufficient. Vale's production is expected to accelerate in the second half of the year [19]. 3. Fundamental analysis 3.1 Domestic ore supply - In H1 2025, China's raw iron ore output was about 509 million tons, a year-on-year decrease of 9.1%. The cumulative output of iron concentrate from 433 domestic mines was 138 million tons, a year-on-year decrease of 8.0%. Domestically sourced iron accounted for about 19.0% of the total supply [20]. 3.2 Demand - More than half of the steel mills were profitable in H1. The total profit of规上 steel enterprises in H1 was 46.28 billion yuan, a year-on-year increase of 13.7 times. However, the revenue of the steel industry decreased by 7.5% year-on-year, and the cumulative crude steel output was 515 million tons, a year-on-year decrease of 3.0%. Steel mills' profits came from cost reduction. High steel mill profits supported high pig iron production and thus iron ore demand [21]. 3.3 Inventory - In H1, the inventory pressure on steel mills and ports was small. Steel mills' inventory was below 100 million tons after the Spring Festival, and the inventory - to - consumption ratio was around 30. The inventory of imported iron ore decreased by about 3 million tons year-on-year. The inventory at 47 ports decreased from about 156 million tons at the beginning of the year to 144 million tons by July, 14 million tons lower than last year [24][26]. 4. Future outlook - In Q1, iron ore prices were relatively firm. In Q2, coking coal prices rebounded, but iron ore price increases were limited. In July, affected by policy expectations, funds flowed into coking coal. The main contradiction in the black sector lies in steel terminal demand, which depends on policy support. In the second half of the year, iron ore supply is expected to be strong, demand depends on policies, and inventory pressure is not large. The downside space for iron ore is limited, and the upside space depends on steel prices [27][30].

Group 1 - The Australian S&P/ASX 200 index closed down by 0.5% [1] - BHP Group was the leading decliner in the index [1]

Group 1 - BHP Group is a diversified mining company with global operations, primarily in Australia and South America, producing iron ore at the lowest cost among major companies, along with copper, nickel, met coal, and potash, providing a solid mix of commodities [1] - The company has a strong focus on metals and mining stocks, while also being comfortable with other industries such as consumer discretionary/staples, REITs, and utilities [1]

Group 1 - Dow futures rose by 0.24%, S&P 500 futures increased by 0.26%, and Nasdaq futures gained 0.28% [1] - NVIDIA CEO Jensen Huang sold 75,000 shares worth approximately $12.94 million, part of a plan to sell up to 6 million shares by the end of the year [2] - Tesla announced that Model 3 sales reached 3 million units, maintaining its position as the global leader in pure electric sedan sales for seven consecutive years [3] Group 2 - TSMC plans to expand its 2nm monthly production capacity from 40,000 wafers at the end of 2024 to 100,000 wafers by 2025, a 150% increase [4] - Cryptocurrency exchange Bullish filed for an IPO to raise up to $100 million, with a cumulative trading volume exceeding $1.25 trillion by March 31, 2025 [5] Group 3 - Block, a fintech company led by Jack Dorsey, will replace Hess in the S&P 500 index, resulting in a 9.78% increase in its stock price [6] - JPMorgan estimates that OpenAI could face a total addressable market exceeding $700 billion by 2030, with a valuation of $300 billion as of March [7] - Microsoft warned of a cyberattack on its SharePoint servers, leading to a 0.1% decline in its stock price [8] Group 4 - BHP's stock rose by 2.55% after Citi reported that its production results for Q4 of FY2025 exceeded expectations, with net debt projected at $13 billion, lower than previous estimates [9]

Investment Rating - Industry rating: Recommended [8] Core Insights - In Q2 2025, copper production increased by 2% year-on-year to 516,200 tons, with a full-year production forecast of 2,016,700 tons, an 8% increase compared to the previous year [2][11] - Nickel production in Q2 2025 saw a significant decline of 99% year-on-year, totaling 300 tons, due to temporary shutdowns [3][12] - Iron ore production reached 70.3 million tons in Q2 2025, a 2% increase year-on-year, with a full-year forecast of 263 million tons, reflecting a 1% increase [4][13] - Coking coal production increased by 5% year-on-year to 10.3 million tons in Q2 2025, while full-year production is expected to decrease by 19% to 36 million tons [5][14] - Thermal coal production rose by 8% year-on-year to 4.1 million tons in Q2 2025, with a full-year forecast of 15 million tons, a 2% decrease [6][15] Summary by Sections Copper - Q2 2025 copper production was 516,200 tons, up 2% year-on-year and 1% quarter-on-quarter [2] - Average realized price for copper was $4.43 per pound, down 3% year-on-year and quarter-on-quarter [19] Nickel - Q2 2025 nickel production was 300 tons, down 99% year-on-year and 87% quarter-on-quarter [3] - Full-year nickel production forecast is 30,200 tons, a 63% decrease compared to the previous year [12] Iron Ore - Q2 2025 iron ore production was 70.3 million tons, up 2% year-on-year and 14% quarter-on-quarter [4] - Average realized price for iron ore was $79.93 per wet ton, down 12% year-on-year and 8% quarter-on-quarter [19] Coking Coal - Q2 2025 coking coal production was 10.3 million tons, up 5% year-on-year and 31% quarter-on-quarter [5] - Average realized price for coking coal was $177.32 per ton, down 28% year-on-year and 4% quarter-on-quarter [19] Thermal Coal - Q2 2025 thermal coal production was 4.1 million tons, up 8% year-on-year and 13% quarter-on-quarter [6] - Average realized price for thermal coal was $85.70 per ton, down 31% year-on-year and 12% quarter-on-quarter [19] Major Projects - The Jansen project is progressing, with 68% completion of the JS1 project, and capital expenditure expected to rise to between $7 billion and $7.4 billion [16]

Group 1 - LME copper prices rose to a one-week high, closing at $9,778.50 per ton, up $112.00 or 1.16% due to increased investor risk appetite and bargain buying [1][2] - Other base metals also saw price increases, with three-month aluminum up 2.00% to $2,629.50, zinc up 2.98% to $2,818.50, and lead up 1.88% to $2,010.00 [2] - BHP Group reported a slight increase in copper production for the fourth quarter, reaching 516,200 tons, up 2.25% year-on-year, and an annual copper production of 2,016,700 tons, an 8% increase from the previous fiscal year [4] Group 2 - Analysts noted that U.S. economic data has improved, boosting hopes for better copper demand and reducing the likelihood of immediate interest rate cuts [4] - LME copper inventories have been rising, particularly in Asian warehouses, as some traders bet on increased buying following recent price declines, though uncertainty remains about whether this will materialize [4] - Peru's copper production fell by 4.6% year-on-year in May, totaling 220,849 tons, highlighting challenges in one of the world's largest copper-producing countries [5] Group 3 - Nickel prices underperformed due to rising inventories and weak demand, with Commerzbank lowering its nickel price forecast for the end of 2025 from $18,000 to $16,000 per ton [6] - Three-month aluminum reached a three-week high of $2,637 per ton, reflecting positive market sentiment [7]

Core Insights - BHP announced the latest cost and progress estimates for the first phase of the Jansen potash project in Canada, indicating that the phase is 68% complete [1] - The projected capital expenditure for the project has increased to between $7 billion and $7.4 billion, including unexpected costs, compared to the initial estimate of $5.7 billion [1] - The first production date has been pushed back to mid-2027, aligning with the original timeline [1] - The group's capital expenditure guidance for fiscal years 2026 and 2027 remains at $11 billion [1]

Core Viewpoint - BHP reported record production levels for iron ore and copper in its annual operational review for the year ending June 30, 2025, highlighting significant achievements in its operations [1] Group 1: Iron Ore Production - BHP's iron ore business in Western Australia set multiple records, including annual production [1] - The overall performance in iron ore indicates strong operational efficiency and capacity utilization [1] Group 2: Copper Production - Copper production exceeded 2 million tons, marking a significant milestone for the company [1] - The Escondida copper mine in Chile achieved its highest production level in 17 years, showcasing the mine's recovery and operational improvements [1] - The Spence copper mine also reached a record high in production, contributing to the overall increase in copper output [1]