- The report tracks industry prosperity signals for sectors such as coal, livestock farming, steel, structural materials, and fuel refining based on recent industry operating indicators[9] - **Coal Industry Model**: The model estimates monthly revenue and profit growth rates for the coal industry based on changes in price factors and production capacity factors. The pricing mechanism is determined by the last price index of the previous month, which sets the sales price for the following month[10][14] - **Livestock Farming Factor**: The "outbound coefficient method" is used to calculate the supply-demand gap for pigs six months in advance. The formula is: $ \text{Outbound Coefficient} = \frac{\text{Single Quarter Pig Outbound}}{\text{Breeding Sow Inventory lag6m}} $ $ \text{6-month Potential Production Capacity} = \text{t-month Breeding Sow Inventory} \times (\text{t+6-month Last Year Outbound Coefficient}) $ $ \text{6-month Potential Pig Demand} = \text{t+6-month Last Year Single Quarter Pig Outbound} $ This method effectively identifies pig price upward cycles[15][16] - **Steel Industry Model**: Monthly profit growth and per-ton profit are predicted using a model that incorporates comprehensive steel prices and cost indicators such as iron ore, coke, pulverized coal, and scrap steel[18] - **Structural Materials and Construction Engineering Model**: Profit changes in the glass and cement manufacturing industries are tracked using price and cost indicators. Configuration signals are designed based on profitability changes. Manufacturing prosperity and real estate sales data are analyzed to assess the likelihood of infrastructure investment expectations[25] - **Fuel Refining and Oil Services Model**: Industry profit growth and cracking spreads are calculated using changes in fuel oil prices and crude oil prices. Configuration signals are designed based on oil prices, cracking spreads, and new drilling changes[27] Backtesting Results - **Coal Industry**: Profit growth is predicted to continue declining in November 2025 due to coal prices being lower than the previous year[14] - **Livestock Farming Factor**: The breeding sow inventory at the end of September 2025 was 40.35 million heads, slightly down month-on-month. The potential pig supply for Q1 2026 is estimated at 19.347 million heads, with demand forecasted at 19.476 million heads, indicating a slightly tight supply-demand balance[17] - **Steel Industry**: Profit growth for October 2025 is predicted to be negative. The rolling 12-month PMI average decreased month-on-month, maintaining a neutral configuration view for the steel industry[23] - **Structural Materials and Construction Engineering**: Flat glass profitability continued to grow year-on-year in October 2025, maintaining a positive signal for the glass industry. Cement industry profits turned negative year-on-year in October 2025, with no positive signals from new housing starts, maintaining a neutral view. Manufacturing PMI and real estate sales data suggest potential infrastructure investment expectations, leading to a positive signal for the construction decoration industry[26] - **Fuel Refining and Oil Services**: Fuel refining industry profits are predicted to grow slightly year-on-year in October 2025. Oil prices were lower than the previous year, maintaining a neutral view for the fuel refining and oil services industries[34][35]

- The report utilizes a methodology from the industry rotation series to track the configuration signals and business indicators of various industries, including coal, livestock farming, steel, structural materials, and fuel refining industries [9] Quantitative Models and Construction Methods Coal Industry Model - **Model Name**: Coal Industry Profit and Revenue Growth Estimation Model - **Model Construction Idea**: The model estimates monthly revenue and profit growth of the coal industry based on the changes in price and production capacity factors [10] - **Model Construction Process**: - The long-term contract mechanism for thermal coal determines the sales price for the next month based on the price index of the last month - Monthly revenue and profit growth are estimated using the year-on-year changes in price factors and production capacity factors [10] - **Model Evaluation**: The model predicts that the coal industry profit for October 2025 will continue to decline year-on-year due to coal prices being lower than the same period last year [14] Livestock Farming Model - **Model Name**: Livestock Supply and Demand Gap Estimation Model - **Model Construction Idea**: The model uses the relationship between the number of breeding sows and the quarterly pig slaughter rate to estimate the supply-demand gap for pigs six months later [15] - **Model Construction Process**: - The model assumes a stable proportional relationship between quarterly pig slaughter and the number of breeding sows six months prior - Formula: $ \text{Slaughter Coefficient} = \frac{\text{Quarterly Pig Slaughter}}{\text{Breeding Sow Inventory (lagged 6 months)}} $ [15] - Potential production capacity after 6 months is calculated as: $ \text{Potential Production Capacity (6 months later)} = \text{Breeding Sow Inventory (current month)} \times \text{Slaughter Coefficient (6 months prior)} $ [16] - Potential demand after 6 months is calculated as: $ \text{Potential Demand (6 months later)} = \text{Quarterly Pig Slaughter (6 months prior)} $ [16] - **Model Evaluation**: Historical experience shows that the slaughter coefficient method effectively identifies pig price upward cycles [16] Steel Industry Model - **Model Name**: Steel Industry Profit and Unit Profit Estimation Model - **Model Construction Idea**: The model predicts monthly profit growth and calculates unit profit for the steel industry by considering comprehensive steel prices and cost indicators such as iron ore, coke, pulverized coal, and scrap steel [18] - **Model Construction Process**: - Comprehensive steel prices and cost indicators are used to predict monthly profit growth - Unit profit is calculated based on the difference between steel prices and costs [18] - **Model Evaluation**: The model predicts that the steel industry profit for September 2025 will grow year-on-year, but the PMI rolling 12-month average remains flat, maintaining a neutral configuration viewpoint [23] Structural Materials and Building Engineering Model - **Model Name**: Glass and Cement Industry Profit Tracking Model - **Model Construction Idea**: The model tracks profitability changes in the glass and cement manufacturing industries using price and cost indicators, and designs configuration signals based on profitability changes [25] - **Model Construction Process**: - Price and cost indicators are used to track profitability changes - Configuration signals are designed based on profitability changes [25] - **Model Evaluation**: - Glass industry profit turned positive year-on-year in September 2025, leading to an upgrade to a positive configuration signal [30] - Cement industry profit remained flat year-on-year, and no positive signals were observed in new housing starts, maintaining a neutral configuration viewpoint [30] Fuel Refining and Oil Services Model - **Model Name**: Fuel Refining and Oil Services Profit and Configuration Signal Model - **Model Construction Idea**: The model estimates industry profit growth and cracking spreads based on changes in refined fuel prices and crude oil prices, and designs configuration signals based on oil prices, cracking spreads, and new drilling changes [31] - **Model Construction Process**: - Refined fuel price changes and crude oil price changes are used to estimate industry profit growth and cracking spreads - Configuration signals are designed based on oil prices, cracking spreads, and new drilling changes [31] - **Model Evaluation**: - The model predicts that the fuel refining industry profit for September 2025 will grow year-on-year due to lower inventory costs from recent low oil prices [31] - Observations show that oil prices in September 2025 were lower than the same period last year, maintaining a neutral configuration viewpoint for the fuel refining and oil services industries [37][38] Model Backtesting Results Coal Industry Model - **Profit Growth**: Predicted to continue declining year-on-year in October 2025 due to lower coal prices compared to the same period last year [14] Livestock Farming Model - **Breeding Sow Inventory**: 4,038 million heads as of August 2025, slightly decreased month-on-month [17] - **Potential Production Capacity (26Q1)**: 19,361 million heads [17] - **Potential Demand (26Q1)**: 19,476 million heads [17] - **Supply-Demand Balance**: Slightly tight [17] Steel Industry Model - **Profit Growth**: Predicted to grow year-on-year in September 2025 [23] - **PMI Rolling Average**: Remained flat for 12 months, not exceeding the threshold [23] Structural Materials and Building Engineering Model - **Glass Industry Profitability**: Turned positive year-on-year in September 2025 [30] - **Cement Industry Profitability**: Remained flat year-on-year in September 2025 [30] - **Manufacturing PMI Rolling Average**: Remained flat for 12 months [30] - **Housing Sales Area**: Observed a year-on-year decline in August 2025 [30] Fuel Refining and Oil Services Model - **Fuel Refining Industry Profitability**: Predicted to grow year-on-year in September 2025 due to lower inventory costs [31] - **Oil Price**: Observed to be lower than the same period last year in September 2025 [37] - **New Drilling Activity**: No significant year-on-year changes observed in the US [38]

Quantitative Models and Construction Methods 1. Model Name: Coal Industry Profit Forecast Model - **Model Construction Idea**: The model estimates monthly revenue and profit growth rates for the coal industry based on changes in price and capacity factors[10][15] - **Model Construction Process**: 1. The pricing mechanism is determined by the last price index of the previous month, which sets the sales price for the next month[10] 2. The model uses year-on-year changes in price factors and capacity factors to estimate revenue and profit growth rates on a monthly basis[10] - **Model Evaluation**: The model provides a systematic approach to track and predict industry profitability trends, but it is sensitive to price fluctuations and external shocks[15] 2. Model Name: Hog Supply-Demand Gap Estimation Model - **Model Construction Idea**: This model predicts the supply-demand gap for hogs six months in advance based on the relationship between sow inventory and hog slaughter rates[16][17] - **Model Construction Process**: 1. The model assumes a stable proportional relationship between quarterly hog slaughter and sow inventory lagged by six months[16] 2. The formula for the slaughter coefficient is: $ \text{Slaughter Coefficient} = \frac{\text{Quarterly Hog Slaughter}}{\text{Sow Inventory (Lagged 6 Months)}} $[16] 3. The potential supply six months later is calculated as: $ \text{Potential Supply (t+6)} = \text{Sow Inventory (t)} \times \text{Slaughter Coefficient (t+6)} $[17] 4. The potential demand six months later is estimated using historical quarterly slaughter data[17] - **Model Evaluation**: The model effectively identifies hog price cycles but relies heavily on the accuracy of historical slaughter coefficients[17] 3. Model Name: Steel Industry Profit Forecast Model - **Model Construction Idea**: The model predicts monthly profit growth and per-ton profitability for the steel industry by integrating steel prices and raw material costs[19] - **Model Construction Process**: 1. The model incorporates comprehensive steel prices and costs of raw materials such as iron ore, coke, pulverized coal, and scrap steel[19] 2. Monthly profit growth rates and per-ton profitability are calculated based on these inputs[19] - **Model Evaluation**: The model provides a detailed view of profitability trends but may not fully capture external demand-side factors[23] 4. Model Name: Glass and Cement Industry Profitability Tracking Model - **Model Construction Idea**: This model tracks profitability changes in the glass and cement industries using price and cost indicators, and generates allocation signals based on these changes[25] - **Model Construction Process**: 1. The model monitors price and cost indicators to assess profitability trends[25] 2. It incorporates manufacturing PMI and real estate sales data to evaluate macroeconomic impacts on industry expectations[25] - **Model Evaluation**: The model is useful for identifying short-term profitability trends but may be limited by the lag in macroeconomic data updates[26] 5. Model Name: Refining and Oilfield Services Profitability Model - **Model Construction Idea**: This model estimates profit growth and cracking spreads for the refining industry based on changes in fuel prices, crude oil prices, and new drilling activity[27] - **Model Construction Process**: 1. The model calculates profit growth rates using changes in fuel and crude oil prices[27] 2. Cracking spreads are derived from the difference between product prices and raw material costs[27] 3. Allocation signals are generated based on oil price trends and drilling activity[27] - **Model Evaluation**: The model captures key profitability drivers but may not fully account for geopolitical risks affecting oil prices[34][35] --- Backtesting Results of Models 1. Coal Industry Profit Forecast Model - **Excess Return**: The coal industry underperformed the Wind All-A Index by -9.8% in August 2025[10] 2. Hog Supply-Demand Gap Estimation Model - **Supply-Demand Balance**: The potential supply for Q1 2026 is estimated at 19,380 million heads, while the demand is forecasted at 19,476 million heads, indicating a slightly tight balance[18] 3. Steel Industry Profit Forecast Model - **Profit Growth**: The steel industry is predicted to achieve positive year-on-year profit growth in August 2025[23] 4. Glass and Cement Industry Profitability Tracking Model - **Glass Industry**: Profit margins continued to decline year-on-year in August 2025, but the rate of decline narrowed[26] - **Cement Industry**: Profitability slightly declined year-on-year in August 2025[26] 5. Refining and Oilfield Services Profitability Model - **Refining Industry**: Profit growth for August 2025 is predicted to be positive[28] - **Oilfield Services**: Oil prices in August 2025 were lower than the previous year, and drilling activity remained stable, leading to a neutral allocation signal[35]