PVC Market Overview - The domestic PVC powder market has seen price increases, with varying growth rates across regions. The PVC futures market is on the rise, but trade merchants report little change in basis quotes, leading to weak spot market transactions [1] - The mainstream cash prices for 5-type calcium carbide PVC are reported as follows: East China at 4730-4860 CNY/ton, South China at 4800-4860 CNY/ton, Hebei at 4500-4630 CNY/ton, and Shandong at 4640-4720 CNY/ton [1] PVC Production and Inventory - As of June 26, the overall operating rate for PVC powder is 76.81%, a slight increase of 0.07 percentage points from the previous period. The operating rate for calcium carbide PVC is 80.43%, while ethylene PVC stands at 67.38% [2] - The social inventory of PVC has increased by 1.03% to 575,200 tons compared to the previous period, but shows a year-on-year decrease of 38.06%. East China holds 523,700 tons, while South China has 51,500 tons [2] PVC Market Outlook - Policy signals aimed at optimizing supply-side dynamics are expected to positively influence the long-term supply-demand imbalance in the PVC market. However, short-term supply-demand issues remain prominent due to the slow clearance of upstream capacity and ongoing demand constraints from the real estate sector [3] - The postponement of the BIS decision until the end of the year may lead to a decline in export volumes in the third quarter, with upcoming anti-dumping tax rulings in July potentially impacting future exports [3] - While the year-on-year inventory situation for PVC shows limited contradictions, the combination of basis and warehouse receipts indicates a fundamental basis for a rebound in PVC prices. However, caution is advised regarding short-term price movements, with long-term prospects dependent on the implementation of policy signals [3]

Investment Rating - The investment rating for the steel industry is Neutral, maintained [7] Core Insights - The steel prices have been fluctuating within a range since Q4 2024, supported by low inventory levels, while the dual coke prices have weakened rapidly under expectations of supply easing, which has been a key factor for steel companies' rebound [2][4] - The industry is experiencing a decline in revenue, with a projected year-on-year decrease of 10.0% in 2024 and 10.3% in Q1 2025, alongside a quarter-on-quarter decrease of 4.8% [2][4] - Cost pressures are easing, with costs expected to decrease by 8.7% year-on-year in 2024 and 12.1% year-on-year in Q1 2025, along with a quarter-on-quarter decrease of 6.1% [2][4] - Profitability is showing signs of recovery, with a rebound in net profit in Q1 2025, turning from losses in the previous year [2][4] - The return on equity (ROE) is projected to drop to -1.63% in 2024 but is expected to rebound to 2.12% in Q1 2025 [2][4] Summary by Sections Cost Pressure Easing and Profitability Improvement - The steel price decline is driven by weak demand and easing cost pressures, leading to a projected revenue decline of 10.0% in 2024 and 10.3% in Q1 2025 [2][4] - The cost of production is expected to decrease, with a year-on-year decline of 8.7% in 2024 and 12.1% in Q1 2025, alongside a quarter-on-quarter decrease of 6.1% [2][4] - The industry is experiencing a significant recovery in profitability, with a projected gross profit increase of 30% year-on-year in Q1 2025 [2][4] Investment Strategy - The report suggests focusing on undervalued leading companies in the steel sector, such as Baosteel and Nanjing Steel, which are expected to enhance shareholder returns [4] - It also highlights the potential of quality new materials in sectors like military and automotive, indicating a favorable investment environment as the industry transitions from valuation recovery to fundamental recovery [4]