Report Industry Investment Ratings - Iron ore: Bearish [2] - Coking coal and coke: Oscillating weakly [2] - Rebar and hot-rolled coil: Weak [2] - Glass: Oscillating [2] - Soda ash: Oscillating [2] - CSI 50: Rebounding [2] - CSI 300: Oscillating [2] - CSI 500: Upward [2] - CSI 1000: Upward [2] - 2-year Treasury bond: Oscillating [4] - 5-year Treasury bond: Oscillating [4] - 10-year Treasury bond: Declining [4] - Gold: High-level oscillation [4] - Silver: Strongly oscillating [4] - Pulp: Oscillating [6] - Logs: Oscillating [6] - Soybean oil: Oscillating bearishly [6] - Palm oil: Oscillating bearishly [6] - Rapeseed oil: Oscillating bearishly [6] - Soybean meal: Oscillating [6] - Rapeseed meal: Oscillating [6] - No. 2 soybeans: Oscillating [6] - No. 1 soybeans: Oscillating bearishly [6] - Live pigs: Oscillating [8] - Rubber: Oscillating [8] - PX: On the sidelines [9] - PTA: On the sidelines [9] - MEG: On the sidelines [9] - PR: On the sidelines [9] - PF: On the sidelines [9] Core Views of the Report - The driving force for the previous policy and sentiment-driven rise in the iron and steel industry is gradually weakening, and it will return to fundamentals in the short term. The real demand for steel products continues to weaken, and the overall pattern of supply increase and demand decrease for the five major steel products persists. The decline in steel prices reduces the rigid demand for raw material procurement. The profitability rate of steel mills is currently high, and the temporary easing of Sino-US relations brings new restocking demand. However, the daily average pig iron output in the previous period decreased by 11,700 tons to 2.436 million tons, exceeding market expectations. The port inventory level of iron ore remains relatively high, exerting pressure on prices. In the long term, domestic demand is weak, and investors who have already entered short positions during the rebound caused by the easing of the trade conflict should continue to hold [2]. - The output of coking coal is at a high level, and the downstream restocking motivation is insufficient after the May Day holiday. The raw coal inventory of 523 sample mines has reached a record high. As pig iron output declines and coking coal supply continues to increase, the far-month 09 contract will continue to weaken. For coke, as coking coal prices fall, the cost of coking enterprises' incoming coal decreases, and most enterprises remain profitable. However, steel mills have initiated a second round of price cuts on coking enterprises today, squeezing coking enterprises' profits. With the arrival of high-temperature weather in various regions, downstream demand weakens, the phenomenon of steel mills controlling production increases, and the inventory pressure of coking enterprises rises. The overall inventory of coke has increased month-on-month, and the pattern of oversupply in the coking coal and coke market remains unchanged, generally following the trend of steel products [2]. - The driving force for the previous policy and sentiment-driven rise in rebar is gradually weakening. The demand decline is relatively slow in the short term, and steel supply is increasing while demand is decreasing. The total inventory is still in the process of destocking, but the impact of the rainy season will drag down terminal demand, and inventory destocking may slow down or even reverse in mid-June. Steel prices face periodic pressure. The profits of long-process steel mills have been repaired periodically, and the blast furnaces under maintenance have resumed production, keeping the supply at a high level. Domestic demand declines seasonally. Attention should be paid to the rush export demand brought about by the 90-day suspension of the 24% tariff. It is expected that steel prices will remain oscillating at a low level in the short term, waiting for a clear signal of demand decline [2]. - There are rumors in the market that glass manufacturers in Hubei plan to cut production, and production and sales have improved. Recently, some production lines have been restarted after cold repair, and the daily melting volume has fluctuated slightly. The daily output of float glass remained stable last week. The spot price of float glass has declined slightly, and profits have also been squeezed. The production enthusiasm of manufacturers in the Shahe area is relatively high, leading to a significant increase in inventory. Both the national manufacturers' inventory and the Shahe area have seen substantial inventory accumulation. The market sentiment of buying up but not buying down is strong, and downstream traders and processing enterprises are highly cautious. In the long term, the real estate industry is still in an adjustment period, and the year-on-year decline in housing completion area is relatively large, making it difficult for glass demand to recover significantly. As the peak season transitions to the off-season, the fundamentals lack the driving force for an upward trend. Attention should be paid to the recovery of downstream demand [2]. - For stock index futures and options, on the previous trading day, the CSI 300 index closed down 0.57%, the SSE 50 index closed down 0.46%, the CSI 500 index closed up 0.29%, and the CSI 1000 index closed up 0.65%. Funds flowed into the leisure products and power generation equipment sectors, while flowing out of the pharmaceutical and automobile sectors. The General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the "Opinions on Improving the Modern Enterprise System with Chinese Characteristics," which proposes to improve the enterprise income distribution system, promote enterprises to establish a reasonable wage growth mechanism, deepen the reform of the wage distribution system of state-owned enterprises, implement the wage total budget cycle system in eligible state-owned enterprises, promote listed companies to carry out medium- and long-term incentives, formulate stable and long-term cash dividend policies, strengthen the fiduciary duties of controlling shareholders to the company, and support listed companies to introduce institutional investors with a shareholding ratio of more than 5% as active shareholders. Moody's has decided to maintain China's sovereign credit rating at "A1" with a negative outlook. The relevant person in charge of the Ministry of Finance stated that since the fourth quarter of last year, the Chinese government has implemented a package of macroeconomic control policies, leading to an improvement in economic indicators, stable market expectations and confidence, and enhanced medium- and long-term sustainability of debt. Moody's decision to maintain the stability of China's sovereign credit rating is a positive reflection of China's economic prospects. In the next step, a series of incremental and existing policies will work together and continue to show results, providing solid support for high-quality economic development. China will remain confident and focused on its own affairs regardless of external changes. The Sino-US tariff issue has achieved phased results, the external market has stabilized, market risk aversion has eased, and investors should hold long positions in stock indices [2][4]. - For Treasury bonds, the yield of the 10-year Chinese Treasury bond has decreased by 2 basis points, FR007 has increased by 7 basis points, and SHIBOR3M has remained unchanged. The central bank announced that on May 26, it conducted 382 billion yuan of 7-day reverse repurchase operations at a fixed interest rate through quantity tender, with an operating interest rate of 1.40%, a bid volume of 382 billion yuan, and a winning volume of 382 billion yuan. According to Wind data, 135 billion yuan of reverse repurchase expired on the same day, resulting in a net injection of 247 billion yuan. The market interest rate is consolidating, and Treasury bonds are oscillating in a narrow range. Investors should hold long positions in Treasury bonds with a light position [4]. - In the context of a high-interest-rate environment and the reconstruction of globalization, the pricing mechanism of gold is shifting from the traditional focus on real interest rates to the central bank's gold purchases, which are the key and reflect the "decentralization" and risk aversion needs. In terms of its monetary attribute, the debt problem has caused cracks in the currency credit of the US dollar, highlighting the de-fiat currency attribute of gold in the process of de-dollarization. In terms of its financial attribute, in the global high-interest-rate environment, the substitution effect of gold as a zero-coupon bond for bonds has weakened, and its sensitivity to the real interest rate of US Treasury bonds has decreased. In terms of its risk aversion attribute, geopolitical risks have marginally weakened, but Trump's tariff policy has intensified global trade tensions, and market risk aversion remains strong, becoming an important factor driving up the gold price in the short term. In terms of its commodity attribute, the demand for physical gold in China has increased significantly, and the central bank has restarted gold purchases since November last year and has been increasing its holdings for six consecutive months. Currently, the logic driving up the gold price has not completely reversed. The Fed's interest rate policy and tariff policy may be short-term disturbing factors. It is expected that this year's interest rate policy will be more cautious, and the evolution of the tariff policy will dominate the change in market risk aversion. According to the latest US data, the non-farm payrolls data shows that the labor market is relatively strong, with non-farm employment exceeding market expectations and the unemployment rate stable at 4.2%. The latest PCE data shows that inflation has slowed down, with core PCE rising 2.6% year-on-year, in line with market expectations, and PCE rising 2.3% year-on-year, slightly higher than market expectations. The CPI in April rose 2.3% year-on-year, exceeding expectations and indicating a continuous decline in inflation. However, inflation is expected to rise again under the influence of tariffs. In the short term, the uncertainty in the trade environment has raised concerns about the global economy, geopolitical risks continue to rise, and the risk aversion demand for gold remains strong. Coupled with the weak US dollar index, it supports the rise in the gold price. It is expected that the gold price will remain strongly oscillating. Attention should be paid to this week's PCE data and meeting minutes [4]. - The spot market price of pulp loosened slightly on the previous trading day, with the price of some softwood pulp in the spot market falling by 20 - 50 yuan/ton and that of some hardwood pulp loosening by 30 - 50 yuan/ton. The latest FOB price of softwood pulp has decreased by 55 US dollars to 770 US dollars/ton, and that of hardwood pulp has decreased by 70 US dollars to 560 US dollars/ton. The decline in the cost price weakens the support for pulp prices. The profitability of the papermaking industry is at a low level, paper mills' inventories continue to accumulate, and they are not willing to accept high-priced pulp, purchasing raw materials only based on rigid demand. The demand has entered the off-season, which is negative for pulp prices. Paper mills have successively issued price increase notices, which is beneficial for boosting industry sentiment. It is expected that pulp prices will oscillate [6]. - The daily average shipment volume of logs at ports last week was 62,100 cubic meters, an increase of 700 cubic meters month-on-month. The downstream has entered the off-season, and it is expected to be difficult to return to the level of 70,000 cubic meters. The volume of logs shipped from New Zealand to China in March was 1.659 million cubic meters, a 32% increase from the previous month. New Zealand has started to cut production, and the log shipment volume has decreased. It is expected that the domestic arrival volume will start to decrease. The expected arrival volume last week was 421,000 cubic meters, a 52% increase month-on-month. As of last week, the log port inventory was 3.43 million cubic meters, a 20,000-cubic-meter increase month-on-month. The spot market price has been relatively stable. The spot market price in Shandong has remained stable at 750 yuan/cubic meter, a 10-yuan decrease from last week, and that in Jiangsu has remained stable at 770 yuan/cubic meter, also a 10-yuan decrease from last week. The latest CFR quotation has decreased by 4 US dollars to 110 US dollars/cubic meter, and it is expected that the June quotation will remain the same. The negative impact on the cost side may weaken. In the short term, the spot market price is relatively stable, demand has improved month-on-month, the arrival volume in the past two weeks has been lower than the average level, and the supply pressure has relatively decreased. The fundamentals of the log market have marginally improved. It is expected that log prices will oscillate [6]. - The inventory of Malaysian palm oil jumped to a six-month high of 1.87 million metric tons in April due to a surge in production and a decline in domestic consumption, a 19.4% month-on-month increase. Indonesia has raised the export tax on palm oil, while Malaysia has lowered the export tax on crude palm oil in June. The price of Indonesian palm oil has lost its competitive edge compared to Malaysia, which is conducive to stimulating the export potential of Malaysian palm oil. However, Malaysian palm oil is in the seasonal production increase cycle, and the production increase is higher than the export increase, so inventory may continue to accumulate. The US biofuel policy still has great uncertainty. South American soybeans have achieved a record high yield, and the domestic arrival volume of soybeans has increased significantly. As the overall operating rate of oil mills has increased, the inventory of soybean oil has started to rise. Although the import profit of palm oil is still negative, palm oil purchases have increased, further replenishing domestic inventory. The supply of the three major oils is abundant. Currently, it is the traditional off-season for oil consumption, and the pre-Dragon Boat Festival stocking is about to end. It is expected that oil prices will oscillate bearishly. Attention should be paid to the weather in the US soybean-producing areas and the production and sales of Malaysian palm oil [6]. - The new crop inventory of US soybeans may become even tighter, leaving less room for error during the critical summer growing season for US soybeans, whose sown area is already expected to decrease. Rainfall in the US Midwest has slowed down spring sowing, and there are concerns about soybean production cuts in Argentina due to heavy rain. The increase in the premium of Brazilian soybeans has driven up the cost of imported soybeans. The domestic arrival volume of soybeans in May has surged to about 11 million tons, and customs clearance has accelerated recently. With the large arrival of imported soybeans, the soybean supply situation has become more relaxed, and the overall operating rate of oil mills has recovered to over 50%. The inventory of soybean meal has increased, and the trading sentiment has improved after the continuous decline in the market. The spot trading volume has increased, and prices have stopped falling and stabilized, alleviating the domestic supply pressure. It is expected that soybean meal prices will oscillate in the short term. Attention should be paid to the weather in North America, the logistics delays in Brazil, and the soybean arrival situation [6]. - The Sino-US trade relations have eased, the USDA report is moderately positive, the export of new Brazilian soybeans has accelerated, and there are concerns about soybean production cuts in Argentina due to heavy rain. According to the shipping and berthing forecasts of major soybean-producing countries, the domestic soybean arrival volume is expected to be relatively large from May to June, exceeding 11 million tons each month. Soybean customs clearance has accelerated, and the soybean inventory has continued to rise. The overall operating rate of oil mills has recovered to over 50%, and the domestic soybean spot price has remained stable. It is expected that the price of No. 2 soybeans will oscillate in the short term. Attention should be paid to the weather in South American soybean-producing areas and the soybean arrival situation [6]. - In terms of supply, the latest data shows that the average slaughter weight of live pigs across the country shows a slight upward trend, with an average trading weight of 126.5 kilograms, a 0.07% month-on-month increase. Regionally, the average trading weight in different provinces varies. Due to the adjustment of the procurement strategy of some local slaughter enterprises, which have reduced the purchase of large-weight pigs, and the decline in the inventory of large pigs after the previous concentrated slaughter, the average trading weight in some areas has decreased. On the other hand, most provinces' breeding farms still maintain the strategy of holding back pigs for weight gain, artificially extending the breeding cycle and driving up the slaughter weight. Slaughter enterprises' demand for standard-weight pigs of 125 - 140 kilograms remains stable, driving up the overall average purchase weight. In terms of demand, the average operating rate of key slaughter enterprises is 34.76%, a 0.18-percentage-point increase from last week. After the festival, the terminal consumption demand has declined seasonally, the downstream procurement and stocking enthusiasm has weakened, and there is no significant boost factor on the consumption side. It is expected that the operating rate of slaughter enterprises will remain oscillating or show a slight decline. After the festival, the consumption demand decreases cyclically, the procurement volume of terminal catering and households has decreased, and the sales of pork products have slowed down. Although it is the traditional off-season for consumption and the slaughter demand remains low, the strong demand for secondary fattening supports prices. It is expected that the live pig market will show a pattern of tight supply in May. The self-breeding and self-raising cost of leading enterprises is supported at around 13,000 yuan per head. There is no obvious upward driving force in the market, and it is expected that pig prices will remain oscillating [8]. - On the supply side, the weather disturbances in domestic and foreign rubber-producing areas have intensified, and rubber supply is under short-term pressure. Recently, there has been frequent rainfall in the main natural rubber-producing areas at home and abroad, significantly interfering with rubber tapping operations. The rainfall in the Southeast Asian producing areas is expected to increase in the coming week, and heavy rain is expected in Myanmar and the western part of Thailand (north of the equator), significantly restricting rubber tapping activities. The weather conditions in the producing areas south of the equator are relatively stable, with rainfall in the medium to low range, having limited impact on rubber tapping. As a result, the supply of rubber raw materials has tightened, and the purchase