Report Summary 1. Investment Rating - The report does not mention the industry investment rating. 2. Core Views - The expectation of anti - involution in the black sector has resurfaced, and the negative feedback logic has encountered obstacles. The black commodity prices rebounded strongly last Friday, but whether anti - involution policies in the steel industry will be implemented remains to be observed [3]. - For steel, it is expected that the price will first fall and then rise in September. It is advisable to buy on dips as the cost - performance of short - selling is low under low valuation. For coal and coke, it is recommended to conduct range trading or short - term trading and focus on the resumption of coking coal production. For iron ore, it is advisable to wait and see or conduct range trading [4]. 3. Summary by Directory 01 Black Sector Trend Comparison - The black sector first fell and then rose last week, with raw materials stronger than finished products [3][5]. 02 Futures Market Rise and Fall Comparison - The trends are differentiated, and the volatility of the black sector is relatively small. 03 Spot Prices - The prices of rebar and scrap steel fell, while the price of iron ore rose [9][10]. 04 Profit and Valuation - Steel mills' profitability is acceptable, and the valuation of rebar futures is relatively low [11]. 05 Steel Supply and Demand - Steel inventories continued to accumulate during the off - season and have exceeded last year's levels [3][13]. 06 Iron Ore Supply and Demand - Iron ore shipments have rebounded significantly, while pig iron production has dropped sharply [22]. 07 Coking Coal Supply and Demand - Coking coal production has declined significantly, and inventories have been depleted again [25]. 08 Coke Supply and Demand - Coke production has declined slightly, and coke enterprise inventories are relatively low [27]. 09 Variety Spreads - Steel mills' on - paper profits continue to decline [29]. 10 Key Data/Policy/News - The National Bureau of Statistics data shows that China's Manufacturing Purchasing Managers' Index in August was 49.4%, up 0.1 percentage points from the previous month. The US employment data was lower than expected, and traders bet that the Fed would further cut interest rates. The eurozone's manufacturing PMI in August expanded for the first time since mid - 2022 [35].

Summary of Conference Call Records Industry Overview - The conference call discusses the industrial sector's performance, particularly focusing on the midstream raw materials industry, fuel processing, and black processing sectors, which benefited from rising prices of coal and steel products [1][4]. Key Points and Arguments - **Profit Improvement in July**: Industrial enterprises saw a marginal improvement in profit growth in July, primarily driven by the midstream raw materials sector, while revenue growth showed a slight decline [3][4]. - **Downstream Consumer Goods Sector**: The downstream consumer goods sector faced challenges due to the automotive manufacturing industry's price wars and a lull in government subsidies, leading to a noticeable drop in revenue and profit growth [5][10]. - **Inventory Trends**: There was a significant acceleration in inventory reduction in July, indicating a conservative market demand outlook. Different industries exhibited varying inventory cycles, with upstream resource sectors starting to actively reduce inventory from June [7][8]. - **Midstream Raw Materials Performance**: The midstream raw materials sector showed notable profit growth, particularly in fuel processing and black processing industries, benefiting from price increases in coal and steel products [4][11]. - **Future Outlook for Downstream Consumer Goods**: Attention is needed on the rollout of government subsidies and the potential shift from goods consumption to service consumption, which may impact corporate profitability [9][13]. Additional Important Insights - **Weak Demand Impact**: The weak demand environment has resulted in longer accounts receivable collection periods and higher inventory turnover days, constraining business operations [12]. - **Potential Risks**: The call highlighted potential risks from external factors such as U.S. tariffs and the impact of changing consumer behavior on domestic demand, which could disrupt industrial profit trends [2][13]. - **Sector-Specific Observations**: The call noted that while the midstream raw materials sector transitioned to active inventory reduction, the upstream sector had been in a passive accumulation phase until June [11]. This summary encapsulates the key insights and trends discussed in the conference call, providing a comprehensive overview of the industrial sector's current state and future outlook.

Supply and Demand - Industrial production shows marginal weakening, with construction activity at seasonal lows, particularly in asphalt and cement operations[2] - Some chemical chains and automotive steel tire production rates have declined, with PX operating rates returning to historical midpoints[2] - Construction demand remains weak, with apparent demand for rebar, wire rod, and building materials below historical levels[2] Prices - International commodity prices are fluctuating, with oil, copper, aluminum, and gold showing a generally strong trend[3] - Domestic industrial products, excluding some building materials, are experiencing a rebound in prices, with the South China comprehensive index showing an upward trend[3] Real Estate - New housing transactions remain at historical lows, with a 16% week-on-week increase in transaction area, but still down 38% and 17% compared to 2023 and 2024 respectively[4] - Second-hand housing transactions are also weak, with prices declining and transaction volumes in major cities like Beijing and Shanghai showing year-on-year decreases of 8% and 2% respectively[4] Exports - July exports are expected to show resilience, with a projected year-on-year increase of approximately 2.8%, and container shipping data indicating a potential increase of around 7%[5] Liquidity - Recent weeks have seen a rise in funding rates, with R007 at 1.49% and DR007 at 1.42% as of August 1[70] - The central bank has conducted a net withdrawal of 15,675 billion yuan through reverse repos in the same period[70] Risk Factors - Potential risks include unexpected fluctuations in commodity prices and stronger-than-expected policy measures[75]

Group 1 - Coking coal shows signs of stabilization after a previous day of limit decline [1] - Expectations of anti-involution have cooled down but are not yet over [1] - The fourth round of price increases for coking coal has been rapidly implemented, indicating potential for further price increases in the future [1]

Group 1 - The core viewpoint of the article highlights the rising price of lithium carbonate, which is approaching the 80,000 yuan mark, driven by frequent disturbances in the resource sector and a strengthening expectation of "anti-involution" [1] Group 2 - The article suggests that the price of lithium carbonate is becoming "unstoppable," indicating a strong upward trend in the market [1]

Industry Investment Ratings No specific industry investment ratings are provided in the report. Core Views - The overall market shows a complex situation with different trends in various sectors. Some sectors are influenced by macro - economic factors, policy changes, and supply - demand relationships [2]. - Different commodities have different price trends and investment opportunities, and corresponding trading strategies are proposed for each commodity. Summary by Categories Financial - **Equity Index**: There is an obvious high - low switching phenomenon between sectors. It is recommended to gradually take profits on long positions in IM futures and replace them with a small amount of short positions in MO put options with a strike price of 6000 in the 08 contract. Unilateral strategies suggest short - term waiting and paying attention to the capital side and incremental policies [2]. - **Treasury Bonds**: After the tax period this week, funds may gradually return to a loose state. In the short - term, the bond market is significantly affected by the stock - bond seesaw effect and is in a box - shock stage. Curve strategies can continue to bet on steepening [2]. - **Precious Metals**: Gold fluctuates more due to short - term trade conflicts and a weaker dollar, maintaining a shock - upward trend above $3300. Silver has further upward space above $38 and long positions can be held [2]. Shipping - **Container Shipping Index (European Line)**: The EC main contract fluctuates. It is expected that the near - month will be weakly volatile. It is advisable to short the 08 contract or lightly short the 10 contract on rallies [2]. Black Metals - **Steel and Iron Ore**: The sentiment in the black metal market has improved, pig iron production has rebounded, and steel mills' restocking provides support. It is recommended to go long on dips for steel, iron ore, coking coal, and coke [2]. Non - Ferrous Metals - **Copper**: With the advancement of anti - involution policies, copper prices fluctuate strongly, with the main contract referring to 78,500 - 81,000 [2]. - **Aluminum and Related Products**: Alumina is strong due to capacity elimination expectations and squeezing risks. Aluminum prices have a slight recovery, but the off - season inventory accumulation expectation is still strong. Zinc has weak demand expectations with inventory accumulation. Tin, nickel, and stainless steel have different trends affected by macro and industrial factors [2]. Energy and Chemicals - **Crude Oil**: The macro and fundamental aspects are in a multi - empty stalemate, and short - term oil prices fluctuate mainly. It is recommended to have a bullish mindset in the short - term [2]. - **Chemicals**: Different chemical products have different trends. For example, PX is supported in the short - term, PTA is also supported, and some products like caustic soda and PVC are affected by macro and policy factors [2]. Agricultural Products - Different agricultural products have different price trends. For example, soybeans have strong bottom support, palm oil is weak due to slow exports, and cotton has a short - term strong trend and a medium - term bearish trend [2]. Special Commodities - Glass, rubber, and industrial silicon are affected by macro factors. Their prices have risen, and it is recommended to wait and see [2]. New Energy - Polysilicon and lithium carbonate are affected by macro - sentiment. Their prices have upward trends, and it is recommended to wait and see while paying attention to risk management [2].

Supply and Demand - Construction activity remains at a seasonal low, with asphalt and cement dispatch rates at historical lows, and funding availability on construction sites lower than in 2024[13] - Industrial production shows a slight decline in chemical chain operating rates, while automotive steel tire operating rates have increased, indicating overall industrial activity remains at a historical high[23] - Demand in construction is weak, with apparent demand for rebar, wire rods, and building materials below historical levels[31] Price Trends - International commodity prices have seen a rebound in oil and gold, while non-ferrous metal prices have declined[38] - Domestic industrial products are experiencing a strong performance, with the Nanhua Composite Index showing a rebound, particularly in the black series and construction materials like asphalt and cement[40] - Agricultural product prices, including pork, have shown signs of recovery in recent weeks[48] Real Estate Market - New housing transactions in major cities have decreased significantly, with a 51% drop in average transaction area compared to the previous two weeks, and a year-on-year decline of 35% compared to 2023[61] - Second-hand housing transactions remain weak, with Beijing, Shanghai, and Shenzhen showing year-on-year declines of -18%, -1%, and +8% respectively[65] Export Performance - Port container throughput increased by 3.9% year-on-year before July 20, with export growth projected at approximately +1.5%[70] - The Shanghai container ship loading index suggests a potential export growth of around +4%[70] Liquidity and Interest Rates - Recent weeks have seen a rise in funding rates, with R007 and DR007 both at 1.51% as of July 18[83] - The central bank has conducted a net withdrawal of 657 billion yuan through reverse repos in the last two weeks[86]