Investment Rating - The industry investment rating is "Positive" and maintained [10] Core Views - The report highlights a weakening in industrial metal commodities due to reduced interest rate expectations and the U.S. imposing a 50% tax on copper, which raises concerns about demand in non-U.S. regions [2] - The strategic value of rare earths is emphasized, with the government reinforcing control over resources and smelting, while overseas efforts to build rare earth supply chains are accelerating [2][8] - Precious metals are expected to perform well, with silver prices reaching a 13-year high driven by increased risk aversion and a potential interest rate cut by the Federal Reserve [6] Summary by Sections Precious Metals - Gold prices stabilized while silver prices hit a new high, driven by heightened risk aversion and expectations of interest rate cuts [6] - The report suggests focusing on silver stocks due to their potential for significant price increases, given the current low silver-to-gold ratio [6] Industrial Metals - Industrial metals experienced volatility, with LME copper down 1.9% and SHFE copper down 1.6%, primarily due to weakened interest rate expectations and the U.S. tax on copper [7] - Copper and aluminum inventories increased, with copper up 8.65% week-on-week and down 21.7% year-on-year, while aluminum increased by 3.06% week-on-week and decreased by 51.8% year-on-year [7] Strategic and Energy Metals - The report indicates a revaluation of strategic metals like rare earths and tungsten, with the government focusing on enhancing control over these resources [8] - The price of rare earths is expected to rise, with significant improvements in the performance of companies in this sector [8] - Cobalt prices are anticipated to rise due to an extension of export bans from the Democratic Republic of Congo, while nickel prices are expected to stabilize [8]

Group 1: Report Industry Investment Rating - No information provided Group 2: Core Viewpoints of the Report - After the easing of global trade frictions, the market focuses on the silver catch - up market. Short - term catch - up expectations may drive the silver price to break through upwards, but there are still uncertainties in interest rate cuts and economic expectations, and sudden risk events may increase the long - position holding pressure [2] - In 2025, the silver price is expected to be mostly volatile throughout the year, with the Shanghai silver central reference at 8,000 yuan/kg. Fed's long - term loose monetary policy and expected 2 interest rate cuts this year drive the silver price, but in the middle and late stages of interest rate cuts, the gold - silver ratio rises, and the industrial demand for silver is expected to decline negatively in 2025, which may put pressure on the silver price [3] Group 3: Summary by Relevant Catalogs 1. Market Review - In the first quarter of 2025, Trump's policies and increased market expectations of Fed's interest rate cuts to 4 times promoted the silver price to run strongly. In the second quarter, Trump's tariff policies and Fed's attitude of not being eager to cut interest rates led to a short - term silver price plunge, but later the suspension of tariff implementation and the easing of Sino - US trade relations pushed the silver price to a new high in June [11] 2. Silver Catch - up Logic 2.1 Gold - Silver Ratio - The gold - silver ratio reflects the price relationship between gold and silver. Its central value has been rising. The change is affected by factors such as the US dollar credit and economic expectations. A decline in the gold - silver ratio usually occurs in the economic expansion stage, while an increase occurs in the stage of rising economic uncertainty [15][20] 2.2 Comparison of Gold and Silver Performance in Bull Markets - There have been three major bull markets in the history of gold and silver prices. In the first stage of each bull market, the gold price usually starts to rise first, and in the second stage, the silver price is likely to start first. In 5 out of 6 upward stages, the silver price outperformed the gold price [22] 2.3 Conditions for Silver to Start Catch - up - When the future economic certainty increases or there is no recession expectation and inflation is expected to rise, the gold - silver ratio will usually be repaired downward. Currently, it is not a suitable stage for silver catch - up trading due to economic uncertainties and uncertainties in Fed's interest rate cuts this year [26][27] 3. Investment Demand Analysis 3.1 Real Interest Rate Analysis - The real interest rate represented by TIPS yield is negatively correlated with the silver ETP position. The real interest rate is affected by the nominal interest rate and inflation expectations. The market's expectation of Fed's interest rate cuts this year has changed, and currently, the market expects 2 interest rate cuts this year [33] 3.2 Future Investment Demand Analysis - Fed is facing a dilemma of rising inflation and economic downturn due to Trump's new policies, and there are many variables in interest rate cuts this year. However, the long - term loose monetary policy is expected to support the long - term investment demand for silver [38] 4. Industrial Demand Analysis 4.1 Photovoltaic Silver Demand Analysis - In 2025, the expected growth rate of photovoltaic silver demand turns negative, mainly affected by the innovation of photovoltaic cell technology and the change of photovoltaic policies. The innovation of photovoltaic cell technology has a significant impact, and policy changes may also reduce the domestic photovoltaic installation expectations [40][41][44] 5. Market Outlook - In 2025, the silver price is expected to be mostly volatile, with the Shanghai silver central reference at 8,000 yuan/kg. The long - term loose monetary policy and expected interest rate cuts support the silver price, but factors such as the rising gold - silver ratio in the middle and late stages of interest rate cuts and the decline in industrial demand may put pressure on the silver price. The tariff policy is a key factor affecting the silver price [48]

Group 1: Silver Price Trends - Silver prices have risen significantly, with Shanghai 1 silver ingot price reaching 8800 RMB/kg, a 15.9% increase since the beginning of the year, and the main futures contract closing at 8792 RMB/kg, reflecting a 14.5% increase [1] - The price of silver reached a high of 9075 RMB/kg on June 18, marking a new record since the contract's inception, while COMEX silver prices peaked at 37.405 USD/oz, the highest since 2012 [1] - Factors such as geopolitical tensions and high gold prices have opened a channel for silver price increases, benefiting mining companies [1][2] Group 2: Industrial and Financial Demand - Silver's dual nature as both a financial and industrial metal makes it attractive for investors seeking undervalued assets, especially as gold prices rise [2] - Industrial demand for silver exceeds 50%, making it more sensitive to economic cycles compared to gold, but its financial attributes resonate with global energy transitions, enhancing its investment value [2][3] - The recent expectations of a Federal Reserve interest rate cut and concerns over the dollar's credibility may further drive silver prices upward [3] Group 3: Mining and Recycling Companies - Mining companies are likely to benefit from rising silver prices, with companies like Shengda Resources reporting no issues with sales despite price increases [4] - Shengda Resources anticipates revenue growth in 2024 due to rising metal prices, with a projected silver ingot production of 25.32 tons and a silver concentrate output of 413.15 tons [4] - In contrast, silver recycling companies face varied impacts from price increases, with business models affecting their cash flow and profitability [5] Group 4: Recycling Business Models - The silver recycling industry is divided into "buyout" and "processing" models, where the buyout model faces increased costs due to rising silver prices, impacting cash flow [5] - Companies operating under the processing model are less affected by price fluctuations, as they do not hold ownership of the silver and only charge processing fees [5]

Core Viewpoint - The silver market is experiencing high volatility after a significant price surge, with indications of a potential trend reversal and a retreat of speculative funds [1] Group 1: Market Dynamics - Following a sharp increase, silver prices are struggling to maintain momentum at $37, raising concerns about a possible downward trend [1] - Technical indicators are showing multiple divergences, suggesting that the upward movement may be losing strength [1] Group 2: Speculative Activity - There is a noticeable trend of retreating speculative funds in the silver market, which could impact future price movements [1] - The market is on alert for a "harvesting" tactic by long positions, indicating a potential shift in investor sentiment [1]

Summary of Key Points from the Conference Call Industry Overview - The silver market possesses dual attributes as both an industrial and precious metal, with over 60% of its demand stemming from industrial uses, particularly in the photovoltaic (PV) sector [2][4][8] - The development of the PV industry significantly impacts silver demand, necessitating close attention to applications in PV and conductive materials, as well as macroeconomic factors like central bank policies and the dollar's performance [2][4] Core Insights and Arguments - Despite recent increases in silver prices, investor sentiment remains disappointed due to silver's higher short-term volatility compared to gold and a slowdown in PV demand growth, which raises concerns about future price trajectories [2][8] - The price relationship between silver and gold remains fundamentally unchanged, indicating a strong correlation where silver has not diverged from gold's trends [2][9] - Historical patterns suggest that surges in silver prices often signal the end of a precious metals bull market and a potential hard landing for the U.S. economy, which could lead to rapid price increases following quantitative easing by the Federal Reserve [2][17] - The current market is viewed as being in a "catch-up" phase, where silver prices are expected to rise alongside a continuing gold bull market, albeit at a slower pace than during a full bull run [2][18] Important but Overlooked Content - The silver market has shown an upward trend despite not meeting the high expectations set for it, particularly in the context of the ongoing gold bull market, which has seen gold prices approach $3,500 [6][12] - The interplay between silver and gold prices is influenced by broader economic conditions, including the potential for a hard landing in the U.S. economy and subsequent monetary policy responses [10][21] - The demand for silver in industrial applications, especially in the PV sector, is critical for its price outlook, and any shortfall in this demand could adversely affect silver prices [10][32] - The concept of "hidden inventory" in the silver market complicates price predictions, as fluctuations in this inventory do not always correlate directly with market prices [29][31] Future Outlook - The future trajectory of silver prices will depend on multiple factors, including the development of the PV industry, global macroeconomic conditions, and the dynamics of related precious metals markets like gold and platinum [7][21] - The potential for a hard landing in the U.S. economy remains a key factor that could trigger significant price movements in silver, similar to past market behaviors [13][14] - Investors are advised to focus on the overall trend in precious metals rather than short-term fluctuations, as the long-term outlook remains positive amid ongoing gold market strength [20][22]

Group 1: Pest Control Industry - The pest control concept saw significant strength in the morning, with the sector index rising over 3%, reaching a two-year high [2] - Major companies like Su Li Co., Longqing Co., and Guangkang Biochemical experienced notable stock price increases, with Su Li Co. hitting the limit up for the second consecutive day [2] - The National Agricultural Technology Center predicts a resurgence of 23 major pests affecting key crops by 2025, with an expected affected area of 2.518 billion acres, a 6.2% increase from 2024 [4] Group 2: Glyphosate and Agricultural Chemicals - The glyphosate industry is undergoing a supply-demand restructuring, with domestic companies likely to leverage cost advantages [5] - Related sectors such as agricultural chemicals and fertilizers also showed strength, with companies like Shenda Co. and Lier Chemical seeing significant stock price increases [4] Group 3: Precious Metals Market - The precious metals sector, particularly silver, saw a collective surge, with the sector index rising over 2% [6] - Domestic silver futures experienced a significant increase, breaking multiple price thresholds and reaching a historical high [7] - The market's risk aversion, driven by geopolitical uncertainties, has led to increased purchases of gold and silver, with gold prices rising 42% over the past year and silver lagging at 15% [8][9] Group 4: Silver Demand and Supply Dynamics - The silver market is facing a supply-demand gap, with global silver demand projected to reach 36,700 tons against a supply of 31,700 tons in 2024, resulting in a shortfall of 5,000 tons [11] - The photovoltaic industry is a key driver of silver demand, with industrial silver usage exceeding 40%, and the transition to N-type solar cells increasing silver consumption by 40%-100% per unit [11] - Citic Securities anticipates a long-term supply shortage in the silver market, suggesting that the correlation between silver prices and supply-demand dynamics may strengthen in the future [11]