2025-07-01 00:40Investment Rating - The report maintains a positive outlook on aluminum and lithium sectors while being less bullish on steel names, indicating a preference for aluminum and lithium investments [1][2]. Core Insights - The report emphasizes the need for steel supply reform, anticipates a near-term bottom for lithium prices, and expects potential corporate actions from aluminum companies in China [1]. - It highlights that aluminum and lithium stocks have performed well, while steel stocks have lagged behind, prompting a reassessment of investment strategies [1]. - The report ranks the sectors in the following order: aluminum > lithium > copper > steel > gold > battery > thermal coal > cement [1]. Summary by Sections Aluminum - The aluminum sector is viewed as undervalued relative to mid-term fundamentals, with expectations for a re-rating driven by a cap on smelting capacity and improved margins [2]. - Shareholder return policies from companies like Hongqiao and Chalco are generating investor interest, with Chalco initiating share buybacks [2]. Steel - The anticipated steel supply reform has been delayed, with internal communications between local governments and steel mills ongoing [6]. - Recent data from the National Bureau of Statistics (NBS) shows a decline in pig iron output of approximately 3% year-over-year in May 2025, contrasting with a 4% increase reported by MySteel [6]. Lithium - The report suggests that lithium prices are nearing a short-term trough at Rmb60,000 per ton, with expectations of production cuts to stabilize the market [8]. - Investors are concerned about the potential restart of suspended supply if prices rebound to Rmb70,000 per ton, alongside ongoing capacity additions in the pipeline [8].