2025-04-27 03:56Investment Rating - The industry view is rated as Attractive, with a preference for gold, cement, building materials, and steel for 2Q25 [7]. Core Insights - Demand in the materials sector showed signs of recovery in 1Q25, but the outlook for 2Q25 is uncertain due to tariff concerns. Domestic excavator sales increased by 38% YoY, and orders from cathode producers rose by 20% due to strong demand from electric vehicles (EV) and energy storage [2]. - The report anticipates that metals-related stocks may outperform in 2H25 as further stimulus is expected [1][6]. - The tariff impact is projected to weigh heavily on the materials space, with a forecasted GDP growth reduction of 30 basis points to 4.2% for 2025 due to tariff shocks and domestic demand impacts [2][18]. Summary by Sections Gold - Gold is identified as the top pick within commodities, supported by ongoing central bank buying and rising ETF inflows. Lower Treasury yields are expected to enhance gold's macro backdrop. Preferred stocks include Zhaojin (1818.HK) and Zijin Mining (2899.HK, 601899.SS) [3]. Cement and Steel - Cement supply-side controls were announced in November 2024, leading to a focus on profitability rather than price wars. The report expects a significant increase in gross profit per ton due to lower coal prices and higher cement prices. For steel, a production cut of 30 million tons and an export cut of 15-20 million tons are anticipated in 2025. Preferred stocks include Anhui Conch (0914.HK, 600585.SS), CNBM (3323.HK), and Baosteel (600019.SS) [4]. Copper and Aluminum - In 2H25, copper and aluminum are expected to outperform due to continued demand from grid and EV-related green infrastructure. Additional fiscal stimulus could further support demand. Preferred stocks include Zijin (2899.HK, 601899.SS), CMOC (3993.HK, 603993.SS), and Hongqiao (1378.HK) [5]. Tariff Impact - The report highlights that the current cumulative US tariffs could have a more significant growth drag than in 2018-19, with expectations of trade talks to lower tariffs to 34% by year-end. The tariff shocks are expected to impact both trade channels and domestic demand [17][18].