Summary of J.P. Morgan's China Metals Activity Tracker Industry Overview - The report focuses on the metals industry in China, specifically tracking inventory trends for steel, iron ore, copper, aluminum, and zinc as of the week ended July 18, 2025 [1][11]. Key Insights 1. **Copper Inventory Trends** - China typically experiences significant destocking of copper inventories from now until September. However, recent data shows a slowing pace of inventory drawdowns, with copper inventories increasing by 3,000 tons last week [1][12]. - The five-year average indicates a normal destocking of approximately 200,000 tons of copper during this period [1][12]. 2. **Steel Mill Margins** - There has been a notable improvement in China steel mill margins over the last three weeks, leading to a ~10% increase in iron ore prices to $102 per ton. Average hot-rolled coil (HRC) steel mill margins have returned to profitability for the first time since early 2023 [2][9]. - Rebar margins are close to breakeven, marking the strongest profitability since early 2023 [2][9]. 3. **Iron Ore Shipments and Production** - Iron ore shipments to China from Australia and Brazil have shown mixed results, with Australian shipments down by 4.3% week-over-week but up 8.2% year-over-year. Brazilian shipments increased by 23.9% week-over-week but decreased by 11.3% year-over-year [4][2]. - Total iron ore arrivals in China increased by 13.7% week-over-week, indicating a robust demand [4][2]. 4. **Impact of U.S. Tariffs on Copper** - A potential 50% tariff on U.S. copper imports, effective August 1, could reduce U.S. demand by approximately 4%, translating to a 0.2% decline in global copper demand [3][12]. - The U.S. exports around 540,000 to 580,000 tons of copper scrap annually, which could help mitigate a primary deficit of 700,000 to 800,000 tons per annum, although increased recycling capacity may take 2-3 years [3][12]. 5. **Physical Demand Indicators** - Despite recent increases in copper, aluminum, and zinc inventories, overall inventories remain at their lowest levels in over five years for this time of year, indicating tight physical markets [12][13]. - China's copper premium has risen by 70% in the last two weeks, reaching approximately $50 per ton, although it remains significantly below the year-to-date high of $103 per ton [12][13]. Additional Observations - The report highlights that the next ten weeks will be critical for assessing the health of Chinese physical copper consumers, as historical trends suggest a shift towards improved demand during this period [12][13]. - The report also includes detailed tables and figures illustrating inventory levels, shipment data, and price forecasts for various metals, providing a comprehensive view of the current market dynamics [4][9][34]. Conclusion - The J.P. Morgan report provides valuable insights into the current state of the metals industry in China, highlighting trends in inventory, pricing, and the potential impact of U.S. tariffs on copper demand. The data suggests a complex interplay of supply and demand factors that investors should monitor closely.

Investment Rating - The report indicates a pecking order for investment ratings: aluminum > lithium > steel > copper > gold > battery > thermal coal > cement [1] Core Insights - Major steel mills in Shanxi Province are mandated to reduce production by 10-30% year-on-year in 2025, resulting in an approximate 6 million tons reduction, which is about 10% year-on-year for the entire province [1] - Shanxi Province accounted for approximately 6% of China's steel market share in 2024 [1] - The supply reform in the steel industry is progressing in a tailored manner rather than a one-size-fits-all approach [1] - The production cuts are expected to support steel prices in the second half of 2025 [1] Summary by Sections - **Production Cuts**: Steel mills in Shanxi Province are required to cut production by 10-30% YoY, leading to a total reduction of around 6 million tons [1] - **Market Share**: Shanxi Province held about 6% of the steel market share in China during 2024 [1] - **Supply Reform**: The ongoing supply reform is being implemented progressively and is not uniform across all mills [1] - **Price Support**: Anticipated production cuts are expected to bolster steel prices in the latter half of 2025 [1]

Global | Metals & Mining Equity Research The Counter-intuitive Consequences of Chinese Steel Production Cuts Following a y/y increase in Chinese steel production in 1Q and in response to trade wars and China's prolonged property market downturn, officials have ordered the closure of up to 50mtpa of steel capacity through the end of the year as part of the government's broader strategy to resolve structural overcapacity issues. Lower steel output should support finished steel prices globally and also impact ...

Asia Pacific Equity Research 03 July 2025 Source: NDRC, MIIT, State Council, MOHRSS, Xinhuanet, J.P. Morgan See page 3 for analyst certification and important disclosures, including non-US analyst disclosures. China Steel J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in ...

Summary of Barclays Metals & Mining Conference Call Industry Overview - **Industry**: Metals & Mining, with a focus on the steel production sector in China and global commodity markets [1][7] Key Points and Arguments 1. **China's Steel Production**: - CISA estimates that nationwide steel production is up 5.4% year-to-date as of late April, contrasting with NBS's 1.1% increase to March [2] - Speculated output restrictions of 50 million tons of crude steel could lead to significant price increases due to low inventories, although rebar futures have fallen by 2.4% week-over-week [2] - Implementing a 50 million ton cut would require a 13.2% decline in average daily production for the remainder of the year, which may be challenging due to economic impacts on local economies [2] 2. **Commodity Price Movements**: - Iron ore prices have seen fluctuations, with a recent increase of 1% for 62% fines, currently at $98.2 per ton [14] - EU HRC prices remain stable at €652 per ton, with a 0% change week-over-week [15] - Copper prices increased by 1% to $9,473 per ton, reflecting a 10% rise over the past month [14] 3. **China's Economic Indicators**: - China's foreign exchange reserves increased by $41 billion month-over-month to approximately $3.3 trillion [9] - Total trade value in April reached 3.84 trillion yuan ($531.46 billion), up 5.6% year-over-year, with exports at 2.27 trillion yuan (+9.3% YoY) and imports at 1.57 trillion yuan (+0.8% YoY) [9] - The People's Bank of China (PBOC) announced a 0.5% cut in the reserve requirement ratio (RRR) for eligible financial institutions, expected to inject approximately 1 trillion yuan ($138.9 billion) into the market [9] 4. **Corporate Developments**: - De Beers is closing its lab-grown diamond business, reaffirming its commitment to traditional diamonds [8] - Guinea canceled a bauxite mining license held by EGA due to non-compliance with refinery construction requirements, impacting EGA's operations significantly [10] - KoBold Metals reached a preliminary agreement to acquire a stake in the Manono lithium deposit in the DRC, aiming to deploy over $1 billion for development [10] 5. **Market Sentiment**: - The market remains cautious with ongoing discussions about output restrictions in the steel sector and the impact of PBOC's monetary policy on market sentiment [12][13] - European steel plate prices have shown limited movement, with inquiries increasing but orders remaining low, indicating a cautious market environment [13] Additional Important Information - **Aluminium Market**: US aluminium inventories are expected to run dry by July, potentially leading to price increases due to tariffs [12] - **Copper Inventory Trends**: Copper inventories on the SHFE have declined by 60% month-over-month, indicating a tightening market [10] - **China's Real Estate Policy Changes**: Chinese officials are considering reforms to the housing market to stabilize prices, which may impact future demand [9] This summary encapsulates the key insights from the conference call, highlighting the current state of the metals and mining industry, particularly in relation to China's steel production and broader economic indicators.

V i e w p o i n t | Emerging Asia + Middle East at close to where China was in 2004 (when the commodities cycle really kicked off) — This is relevant because of the refrain that "if China rolls off there are no other markets big enough which can provide a meaningful offset". While that appears to be still largely true, if Emerging Asia+ Middle East continue the growth rate seen in the last 19 years for the next 19 years, it could start to be meaningful enough to provide an offset for a (small) slowdown in s ...

7 April 2025 | 9:24PM HKT China Commodities Tariffs - China steel and metals, and ag commodities On April 2nd, President Trump announced "reciprocal" tariffs on trading partners, resulting in what we estimate to be an increase of 26pp in the average effective US tariff rate on China, which would bring the total effective tariff rate on Chinese goods to 58% (link). In response, on April 4th, Chinese policymakers announced a 34pp tariff increase on all US exports to China, in addition to retaliatory tariffs i ...

V i e w p o i n t | 06 Mar 2025 00:02:47 ET │ 16 pages Global Metals & Mining Supply Side Reform 2.0 in Steel in China: Where to for Iron Ore? CITI'S TAKE Supply side reform 2.0 in steel looks very likely in our view and would likely lead to cuts in steel production (and steel exports from) China. While good for China and ex-China steel producer margins, the potential impact on iron ore is more debatable and depends on steel demand (China or ex-China) than on production. While steel production ex-China is l ...

Investment Rating - The report does not explicitly state an investment rating for the industry, but it provides insights into inventory trends and production data that may influence investment decisions. Core Insights - China's physical inventory trends for metals such as steel, iron ore, copper, aluminum, and zinc are being closely monitored, particularly following recent monetary policy loosening [1][2]. - Steel production in China has shown a slight increase of 2% week-over-week, with iron ore arrivals reaching the highest levels in over five years [1][2]. - Copper premiums in China fell by 20% last week, indicating a potential shift in demand dynamics [1][7]. - The report highlights that while steel inventories have decreased significantly, there is a risk of inventory buildup if production outpaces actual consumption [2][6]. Summary by Sections Steel Production and Inventory - CISA data indicates a 1.6% increase in steel production for the first ten days of October, with production now only 4% lower year-over-year [1]. - Preliminary data shows a 10% increase in steel exports for September compared to August, reaching an annualized rate of 124 million tons, the highest since June 2016 [1][12]. - Total steel inventory in China has decreased by 25% over the last two months, now at its lowest level since January 2024 [10]. Iron Ore Trends - Landed iron ore arrivals in China rose by 45% week-over-week to 30.43 million tons, marking a 6% year-over-year increase [2][4]. - Global iron ore shipments increased by 1% week-over-week but were down 2% year-over-year [4][11]. - Iron ore portside inventory in China is approximately 25 million tons above the normal seasonal average, but it has decreased by 5 million tons in the last month [11]. Copper and Aluminum Insights - Copper inventories in China have increased by 25,000 tons over the last two weeks, although they remain below the five-year average [7][12]. - Aluminum inventory de-stocking has slowed in October, but it remains slightly stronger than the five-year average [8][16]. - The report forecasts copper prices to reach $11,000 per ton in Q2 2025 and $11,500 in Q3 2025, approximately 15% above current spot prices [7]. Market Dynamics - The report notes that steel mill margins have improved to their highest levels in about two years, although margins for hot-rolled coil (HRC) have weakened recently [8][10]. - Overall steel demand in China remains 6% lower year-over-year, despite a 2% week-over-week increase in domestic consumption [1][6].

Investment Rating - The industry investment rating is Attractive [1]. Core Insights - Steel apparent consumption is increasing following the National Day Holiday, with long products showing a significant rise in output due to low inventory and improved profitability [1][1]. - Steel inventory has decreased at both traders and mills, with traders' inventory down by 205 kt (2.2% WoW) and mills' inventory down to 3,954 kt (2.1% WoW) as of October 10 [1][1]. - Iron ore inventory at small- and medium-sized mills decreased by 19.7 kt (9.6%) from September 25, indicating a tightening supply [1][1]. Summary by Sections Steel Consumption and Inventory - Apparent consumption of long and flat products increased by 25.5% WoW and 3.3% WoW, respectively, but decreased by 8.6% and 0.4% YoY [1]. - The inventory at traders decreased by 205 kt, with long products down 3.4% WoW and flat products down 1.4% WoW [1]. Iron Ore Market - Iron ore inventory at ports decreased by 1.5% WoW to 143.8 mt as of September 27, with the operating rate at sample mines increasing to 63.3% [1]. - Combined shipments from Australia and Brazil fell by 2.2 Mt week-on-week, primarily due to softer shipments from Rio Tinto [1]. Production Insights - The utilization rate of 247 mills increased by 0.39 ppts WoW to 84.5%, with CISA member mills' production at 1.99 mnt per day, up 2.7% from the preceding 10 days but down 6.8% YoY [1]. - Weekly output for long products rose by 3.8% WoW to 3.28 mnt, while flat products fell by 0.3% WoW to 5.36 mnt [1].