Core Points - The Ministry of Ecology and Environment has issued the "Quota Plan" for the national carbon emission trading market, focusing on the steel, cement, and aluminum smelting industries for the years 2024 and 2025 [1] - The plan emphasizes a dynamic linkage between enterprise quota and actual output, without setting an absolute cap on carbon emissions, ensuring necessary development space for industries [2] - The carbon quota distribution will target the most carbon-intensive production enterprises, which account for over 98% of emissions in their respective sectors [2] Group 1 - The "Quota Plan" outlines the allocation and management of carbon quotas for key emission units in the steel, cement, and aluminum industries, with the first quota compliance expected within the year [1] - Industries such as chemicals, petrochemicals, civil aviation, and paper-making are in the preparatory phase for inclusion in the carbon trading market, aiming for comprehensive coverage by 2027 [1][6] - The plan encourages companies to optimize production processes and adopt low-carbon technologies, such as electric arc furnaces and hydrogen reduction methods, to achieve deeper decarbonization [3] Group 2 - The Ministry of Ecology and Environment is enhancing the management of carbon emission data quality, which is crucial for the national carbon market's construction [4] - Measures include improving the accounting and reporting verification system, and encouraging companies to innovate data quality management techniques using technologies like blockchain and IoT [4][5] - Following the market expansion in 2025, it is expected that 1,500 new key emission units will be added, covering over 60% of national CO2 emissions [4] Group 3 - The expansion of the carbon trading market will be conducted in a phased manner, based on the maturity of each industry and the quality of data available [6][7] - The Ministry aims to gradually include additional sectors, with a target for the carbon trading market to cover major industrial emission sectors by 2027 [7]

Core Viewpoint - The issuance of the "Opinions on Promoting Green and Low-Carbon Transition and Strengthening National Carbon Market Construction" marks a significant step towards the comprehensive deepening and acceleration of the national carbon market, providing direction for institutional innovation and operational optimization, which is crucial for achieving carbon peak and carbon neutrality goals [1] Group 1: Carbon Market Structure - The national carbon trading market consists of a mandatory carbon trading market and a voluntary emission reduction market, which are interconnected through quota clearing and offset mechanisms, each with its own focus and independent operation [2] - The carbon pricing mechanism is central to the carbon trading market policy, with quota allocation being a key factor influencing carbon pricing [2] Group 2: Quota Allocation and Control - Currently, carbon quotas are primarily allocated for free, based on carbon emission intensity and actual production, to avoid limiting production and impacting economic growth [2] - As more carbon emitters are included in the market, the focus will gradually shift from controlling carbon intensity to controlling total carbon emissions, transitioning from free allocation to a combination of free and paid allocation methods [2] Group 3: Monitoring and Verification - A robust monitoring, reporting, and verification (MRV) system is essential for accurately determining historical carbon emissions and their changes over time, which supports the effective implementation of the carbon market [3] - Improving the quality of carbon emission data through comprehensive regulation and automated monitoring is a key direction for enhancing carbon accounting and reporting management [3] Group 4: Green Technology and Economic Transition - Companies can promote green technology research and application through low-carbon production methods, creating a virtuous cycle of emission reduction, revenue generation, and reinvestment in research [4] - The transition to low-carbon industries can be facilitated by eliminating outdated production capacity and fostering the development of clean energy, low-carbon equipment manufacturing, and carbon consulting [4] - The establishment of a comprehensive voluntary certification methodology for emission reduction projects will provide stronger momentum for achieving green and low-carbon goals in the future [4]

Investment Rating - The report maintains a "Buy" recommendation for several steel companies, including Baosteel, Hualing Steel, and Nanjing Steel, among others [3][4]. Core Insights - The rebound in coking coal prices is noteworthy, with a focus on the resilience of demand during the off-season. The report indicates that domestic steel demand is gradually entering a seasonal decline, while external demand remains uncertain due to tariff adjustments by the U.S. government [3][4]. - The report highlights that the profitability of long-process steel production has increased, with specific profit margins for rebar, hot-rolled, and cold-rolled steel showing positive changes compared to the previous week [2][3]. - The overall steel production has decreased, with a total output of 8.8 million tons for major steel varieties, reflecting a slight decline from the previous week [2][3]. Summary by Sections Price Trends - As of June 6, 2025, steel prices in Shanghai showed mixed trends, with rebar prices at 3,140 CNY/ton (up 10 CNY), hot-rolled steel at 3,260 CNY/ton (up 60 CNY), and cold-rolled steel remaining stable at 3,580 CNY/ton [1][10]. Production and Inventory - The total production of major steel varieties was 8.8 million tons, with a week-on-week decrease of 0.47 million tons. Rebar production specifically decreased by 70,500 tons to 2,184,600 tons [2][3]. - Total social inventory of major steel varieties decreased by 16,100 tons to 9,298,600 tons, with rebar inventory dropping by 89,700 tons [2][3]. Investment Recommendations - The report recommends focusing on the following companies: 1. Baosteel, Hualing Steel, Nanjing Steel in the general steel sector 2. CITIC Special Steel, Yongjin Co., and Xianglou New Materials in the special steel sector 3. Jiuli Special Materials, Wujin Stainless Steel, and Youfa Group in the pipe materials sector [3][4].

Core Viewpoint - The online discussion held by the China Iron and Steel Association aimed to gather feedback from steel enterprises regarding the carbon quota allocation scheme, which is crucial for the carbon market's operation and directly impacts production costs and strategic planning [1][2]. Group 1: Meeting Overview - The meeting was attended by over 120 representatives from major steel companies, including Shougang Group, Baowu Group, and others, indicating a significant industry participation [1]. - The discussion was led by Jiang Wei, the Deputy Secretary-General and Vice President of the Steel Association, highlighting the importance of the carbon quota allocation as a "lifeline" for the carbon market [2]. Group 2: Industry Implications - The participating companies accounted for 66% of the national crude steel output, suggesting that their feedback reflects the broader industry's needs [2]. - The carbon quota allocation scheme is seen as a mechanism to encourage companies to optimize energy structures and improve efficiency through a "reward and punishment" system [2]. Group 3: Future Actions - Steel enterprises are encouraged to utilize the three-year transition period to enhance their carbon asset management, improve data accuracy, and participate in carbon market trading [2]. - The Steel Association plans to compile and study the suggestions made by the companies and provide timely feedback to the Ministry of Ecology and Environment [2].