Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Chinese economy, specifically macroeconomic indicators such as industrial production (IP), fixed asset investment (FAI), and retail sales for August 2023 [1][2]. Core Insights and Arguments 1. **Industrial Production (IP) Forecast**: - Expected to grow by 6.2% year-on-year (yoy) in August, up from 5.7% yoy in July, driven by improved manufacturing PMIs and a significant increase in steel production and demand [5][6]. - The forecast indicates a month-over-month annualized growth of 6.9% for August, contrasting with a decline of 3.2% in July [5]. 2. **Fixed Asset Investment (FAI) Outlook**: - Anticipated to remain sluggish with a forecast of -3.0% yoy in August, an improvement from -5.2% yoy in July [6]. - Factors contributing to this sluggishness include adverse weather conditions and local restrictions on construction activities due to the military parade on September 3 [6]. 3. **Retail Sales Projection**: - Expected to decline to 3.2% yoy in August from 3.7% yoy in July, influenced by falling automobile sales growth (4.6% in August from 7.3% in July) and a slowdown in home appliance sales [6]. - The decline is attributed to the diminishing effectiveness of the consumer goods trade-in program and increased funding shortages [6]. 4. **Market Consensus Comparison**: - The forecasts for IP are above market consensus (6.2% vs. 5.6% yoy), while those for FAI and retail sales are below consensus expectations [6]. Additional Important Insights - The macro data for August appears mixed, with improvements in official and unofficial PMIs, but slower growth in exports and imports [2]. - Year-on-year PPI deflation has eased due to "anti-involution" policies aimed at curbing price competition, while CPI inflation has turned negative due to deeper food deflation [2]. - High-frequency trackers indicate stable growth momentum in August compared to July, despite sectoral divergences [2]. This summary encapsulates the key points and insights from the conference call, providing a comprehensive overview of the anticipated economic indicators for China in August 2023.

Summary of J.P. Morgan's Research on China Steel Industry Industry Overview - **Industry**: China Steel - **Key Findings**: Recent data indicates a significant slowdown in steel production, potentially linked to seasonal trends and government policies aimed at reducing overcapacity in the steel sector. Key Points Production Trends - **Steel Output Decline**: The latest 10-day average crude steel output in China is annualized at 934 million tons (Mt), reflecting a 7% decrease compared to the previous period and a 4% year-over-year (YoY) decline. This is the lowest output for this period since 2018, which recorded 889 Mt [1][10] - **Seasonal Factors**: The slowdown aligns with typical seasonal patterns observed in late July, as steel production generally decelerates in the third and fourth quarters [2][3] - **Anti-Involution Policies**: The production decline may also signal the impact of China's anti-involution policies aimed at curbing overcapacity in the steel industry, marking a potential shift in production velocity beyond mere seasonality [2] Export Dynamics - **Record Exports**: Despite the production slowdown, July steel exports were recorded at 116 Mt, a 1.7% decrease from June but still the highest for July, representing a 26% increase YoY. Year-to-date exports for the first seven months of 2025 are up 11% YoY [3][8] - **Future Projections**: J.P. Morgan forecasts that China's steel exports will remain robust, averaging around 100 Mt per annum for the remainder of the decade, with current exports tracking at approximately 12% of total crude steel production [3] Price Forecasts - **Production Estimates**: J.P. Morgan estimates China's steel production for 2025 to be 990 Mt, a 1.5% decrease from 2024's forecast of 1,005 Mt [4] - **Iron Ore Prices**: Projected iron ore prices are expected to be $95 per ton in Q3 and Q4 of 2025, with a similar forecast for 2026. Recent trends show iron ore prices have increased by 6% over the past month, surpassing $100 per ton [4] Inventory and Margins - **Steel Inventory**: As of August 1, total steel inventory in China is flat compared to the past three months but down 11% YoY, indicating the lowest levels for this time of year in over five years [19] - **Mill Margins**: Steel mill margins in China have strengthened since July, reaching their highest levels since October 2024 [22] Additional Insights - **Sector Impact**: The anti-involution policies are expected to affect various sectors, including Metals & Mining, Chemicals, Automotives, and Capital Goods, indicating broader implications for the economy [2] - **Equity Recommendations**: J.P. Morgan has highlighted Rio Tinto as a key equity exposure in the European Metals & Mining sector, with a fair value estimate of £55 per share, potentially rising to £65-75 per share at current commodity prices [4] This comprehensive analysis provides insights into the current state and future outlook of the China steel industry, highlighting production trends, export dynamics, pricing forecasts, and the impact of government policies.