Market Overview - The steel sector has shown a strong upward trend, with the market optimistic about a strong performance in August [1][4] - The overall A-share market experienced slight declines, with the Shanghai Composite Index down by 0.12% and the Shenzhen Component Index down by 0.26% [1][2] Steel Sector Performance - The Wande Steel Index increased by 1.26%, outperforming other sectors [4] - Notable stocks include Bayi Steel, which hit the daily limit, and other companies like Shagang and Xining Special Steel, which saw gains exceeding 5% [3][4] Demand and Supply Dynamics - In July, the supply-demand pressure for steel eased, with 4% of companies reporting full production capacity, an increase of 1% from the previous period [6] - Downstream orders showed slight improvement, with a 6% increase in companies reporting good order conditions compared to the previous period [7] Profitability Forecasts - As of August 8, 27 steel concept stocks have released half-year performance forecasts, with 15 companies expected to be profitable [9] - Notable profit forecasts include Shougang's expected net profit of 6.57 billion yuan, representing a year-on-year increase of 62.62% to 70.22% [9][10] Institutional Attention - Companies such as Jiuli Special Materials and CITIC Special Steel are receiving significant attention from institutions, with the number of rating agencies being 17 and 13 respectively [10][11]

Summary of Steel Industry Conference Call Industry Overview - The conference call focused on the steel industry, highlighting significant trends and challenges faced in the market during the first half of 2025 and projections for the remainder of the year [1][3][12]. Key Points and Arguments 1. **Export Performance**: Steel exports reached a record high in the first half of the year, with expectations to exceed 100 million tons for the full year, representing a year-on-year increase of approximately 10% due to strong overseas demand and China's cost advantages [1][3]. 2. **Market Dynamics**: Since July, new orders have significantly declined, which may lead to deteriorating export data in the fourth quarter [1][2]. 3. **Inventory Trends**: The black series industry chain has been in a continuous destocking phase since 2022, maintaining low to medium inventory levels across all segments, indicating a lack of speculative behavior in the market [1][5]. 4. **Profit Margins**: Electric arc furnace steel mills reported minimal profits, while blast furnace profits remained between 100 to 200 RMB, primarily benefiting from lower prices of thermal and coking coal [1][7]. 5. **Coking Coal Price Surge**: Coking coal prices have surged by 60% to 80%, with significant increases in market positions, yet no intervention from exchanges has been observed [1][9]. 6. **Policy Impact**: The "anti-involution" policy has shifted market trading logic, with expectations of supply-side reforms influencing prices of coking coal and polysilicon, although no significant production cuts in the steel and coal sectors have been noted [1][10][11]. 7. **Future Production Plans**: Iron output is expected to slightly increase in August, but the actual impact will depend on regulatory enforcement and whether coal mines and steel mills will genuinely reduce production [2][20]. 8. **Market Sentiment**: The market is currently in a speculative phase, with expectations of future demand not yet materializing into actual demand increases [20][31]. 9. **Regulatory Environment**: The Ministry of Industry and Information Technology has issued guidelines for the steel industry, focusing on controlling growth, optimizing existing capacity, and phasing out outdated production [18]. 10. **Profitability Concerns**: While steel mills are currently profitable, downstream processing plants are experiencing narrowing margins, leading to a tense spot market situation [19][24]. Additional Important Insights - **Export Composition**: The export share of steel billet and rebar has significantly increased, while the share of rolled products has decreased due to anti-dumping measures in regions like Southeast Asia and South Korea [4]. - **Market Predictions**: The market is expected to enter a seasonal inventory accumulation phase starting in August, influenced by production changes rather than demand fluctuations [23]. - **Long-term Outlook**: The steel industry is anticipated to maintain reasonable profitability over the next few years, but the actual execution of supply-side reforms remains uncertain [33]. This summary encapsulates the critical insights and projections discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the steel industry.

Investment Rating - The report maintains a positive outlook on the steel sector, emphasizing its mid-term investment value under the "anti-involution" policy context [9][14]. Core Viewpoints - The steel sector is expected to have fundamental support for mid-term investment value, driven by supply-side, cost, and profit release expectations [9][14]. - The "anti-involution" policy is seen as a short-term catalyst for realizing mid-term investment logic, with three favorable mid-term logic points identified [9][14]. Supply and Demand Logic - The ultra-low emission transformation is nearing completion, which is expected to reverse structural supply issues and serve as a mid-term capacity clearance tool [15]. - As of April 20, 2025, approximately 760 million tons of capacity have completed or partially completed ultra-low emission transformations [15]. - Downstream demand from infrastructure and shipbuilding industries is anticipated to grow, supporting steel price stabilization and profit release [15]. Cost Logic - The West Mangu project is set to commence production by the end of 2025, with an annual output of 120 million tons, potentially contributing nearly 5% to global supply [15]. - The project is expected to alleviate profit pressure on midstream steel companies from upstream raw material costs [15]. High Dividend Logic - With the completion of ultra-low emission transformations and capacity replacements, capital expenditures for steel companies are expected to decline [15]. - The report anticipates accelerated profit release for midstream steel companies, making high dividends a reality [15]. Steel Price Outlook - The report indicates that the steel price index is expected to continue rising, with a notable increase of 4.16% in the overall steel price index this week [35]. - The price of cold-rolled steel has seen a significant rise of 4.67% [35]. Inventory and Production Data - The report notes a weekly rebar consumption of 2.17 million tons, reflecting a week-on-week increase of 5.05% [16]. - Social inventory and steel mill inventory are showing signs of divergence, with expectations for continued improvement on the demand side [22]. New Energy Metals - The report highlights a significant year-on-year increase of 20.95% in lithium carbonate production in June 2025, reaching 71,890 tons [39]. - The demand for new energy vehicles remains strong, with June 2025 production of 1.1923 million units, a year-on-year increase of 24.11% [43]. Price Trends in New Energy Metals - The average price of battery-grade lithium carbonate has risen significantly, reaching 77,000 yuan per ton, a week-on-week increase of 17.56% [48]. - Nickel prices have also shown upward trends, with LME nickel settling at 15,330 USD per ton [48].

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - The report suggests that signals of "anti-involution" will drive the industry out of its bottom phase [1] - The report highlights that the SW Steel Index has increased by 4.4% week-to-date and 10.2% year-to-date, indicating a positive trend in the steel sector [3] - The total social inventory of five major steel products is 9.13 million tons, showing a slight increase of 0.2% week-to-date but a significant increase of 20.4% year-to-date [5] - The report notes that the iron ore port inventory stands at 13,769 million tons, with a week-to-date increase of 0.8% and a year-to-date decrease of 7.3% [5] Price Data Summary - The report provides various price data for steel products, including: - Rebar (HRB400 20mm) at 3,240 CNY/ton, with a week-to-date increase of 1.9% and a year-to-date decrease of 5.0% [3] - Hot-rolled coil at 3,310 CNY/ton, with a week-to-date increase of 1.2% and a year-to-date decrease of 3.2% [3] - Cold-rolled steel at 3,640 CNY/ton, with a week-to-date increase of 0.3% and a year-to-date decrease of 11.4% [3] Supply and Demand - The weekly production of five major steel products is reported, with a notable increase in daily molten iron output [9] - The report indicates that the operating rate of blast furnaces across 247 companies is being monitored, reflecting the industry's production capacity utilization [12][14]

1. Report Industry Investment Ratings - Not provided in the report 2. Core Views of the Report - The "anti - involution" sentiment has affected the black metal market. For different products, the market situation and influencing factors vary. Although the "anti - involution" has catalyzed short - term market fluctuations, the actual supply and demand fundamentals and policy expectations still play important roles in determining the market trends [5][7][64][111] 3. Summary by Related Catalogs 3.1. PART ONE: Rebar - **Supply**: It is neutral. Iron - water production decreased slightly this week. Long - process steel mills still have good profits, and short - process production may fluctuate due to the power peak season. The supply of steel products is expected to remain stable with a slight decline, and attention should be paid to administrative production restrictions [7] - **Demand**: It is neutral. Market fluctuations have increased recently, and the demand for some steel products is slightly stronger than others. The demand for hot - rolled, cold - rolled, and medium - thick plates is better than in previous years, while the demand for building materials is slightly weaker. The coal - coke price is firm, but the coal price may lack the momentum to continue rising [7] - **Inventory**: It is bullish. The total inventory level is low, and the inventory accumulation during the off - season is not significant, which may trigger unexpected restocking [7] - **Basis/Spread**: It is bearish. The basis has shrunk significantly, and the spot in some areas has returned to a discount. As of Friday, the basis of rb2510 in the East China region (Hangzhou) was 28, a decrease of 30 compared with the previous week [7] - **Profit**: It is bearish. Long - process steel production still has profits, while short - process production profits are unstable, and the production reduction has increased slightly [7] - **Valuation**: It is neutral. The production links in the industry chain have meager profits, with relatively low relative valuations and absolute valuations not reaching the bottom [7] - **Macro and Policy**: It is bullish. Due to the expectations of domestic conferences in July and US interest rate cuts in September, market risk appetite has increased, and short - term funds are willing to enter the market [7] - **Investment View**: It is to wait and see. If no substantial policies are introduced in the short term, the positive impact on profits and product prices may not last long. The basis of black - sector varieties has been shrinking recently [7] - **Trading Strategy**: For single - side trading, observe the pressure level; for arbitrage, take profit on short - term long positions in the spread between hot - rolled and rebar; for cash - and - carry, take profit on reverse arbitrage and enter long positions in batches [7] 3.2. PART TWO: Coking Coal and Coke - **Demand**: It is neutral. The supply and demand of the five major steel products have both increased, but attention should be paid to whether the pressure on non - five - major steel products is increasing. The daily average iron - water production has decreased, and the steel - mill profitability rate is still good, but there are signs of weakening iron - water production [64] - **Coking Coal Supply**: It is neutral. Domestic coal mines are gradually resuming production, the port clearance has recovered slowly, and the sentiment in the seaborne coal market has improved [64] - **Coke Supply**: It is neutral. Coke production has continued to decline this week, and the coking profit has decreased. However, the spot sentiment of coal and coke has strengthened due to downstream restocking [64] - **Inventory**: It is bearish. Downstream procurement has started, but the rate of total inventory reduction has narrowed, and the overall fundamentals are gradually weakening [64] - **Basis/Spread**: It is bearish. Coke has not yet started to increase prices, and the warehouse - receipt cost has changed [64] - **Profit**: It is neutral. Steel - mill profitability is still good, but coking profit has decreased, and the cost of coking coal has increased [64] - **Summary**: It is bearish. Although the "anti - involution" policy has boosted market sentiment, the current situation is not comparable to the 2015 supply - side reform. The policy may lead to a reduction in demand rather than supply for the black - metal industry. The industry data shows signs of weakening, and it is recommended to wait and see for single - side trading and establish cash - and - carry positions for industrial customers [64] - **Trading Strategy**: For single - side trading, industrial customers should actively engage in cash - and - carry hedging; for arbitrage, wait and see. Pay attention to changes in coal - mine production policies, steel demand, and macro - level disturbances [64] 3.3. PART THREE: Iron Ore - **Supply**: It is neutral. The end - of - season rush for iron - ore shipments has ended, and shipments from Australia and Brazil have declined rapidly in the first week of July, while shipments from India have increased significantly. Seasonally, shipments will continue to decline in July, but the increase in arrivals in July will relieve the pressure on near - month contracts [112] - **Demand**: It is neutral. Steel - mill iron - water production has decreased significantly this week, mainly due to the decline in finished - product demand in some areas and seasonal blast - furnace inspections. It is expected that the daily average iron - water production will remain at a high level of around 240 in July. The demand for steel products has shown an off - season but not weak state recently, and the negative feedback logic based on weakening downstream demand has not been supported by current data [112] - **Inventory**: It is bearish. The inventory of 47 ports, the amount of ships waiting at ports, and the in - plant inventory have all increased, with a total inventory increase of 124 tons. There is still a risk of inventory accumulation with the decline in iron - water production and high arrivals [112] - **Profit**: It is neutral. Steel - mill profits are still at a high level, so the iron - water production can remain at a high level in the short term [112] - **Valuation**: It is neutral. The iron - water production is at a high level, and the short - term valuation is relatively neutral [112] - **Summary**: It is neutral. The iron - water production has decreased significantly this week. The basis of iron ore has bottomed out and rebounded under the "anti - involution" trading sentiment. The "anti - involution" mainly affects the new - energy and photovoltaic industries, and its impact on the black - metal industry is mainly emotional. It is not recommended to short the black - metal market in the short term [112] - **Investment View**: It is to expect a sideways movement - **Trading Strategy**: For single - side trading, wait and see; for arbitrage, wait and see temporarily. Pay attention to recession trading and the implementation of flat - control policies [113]

Core Viewpoint - The steel market is experiencing weak demand and supply, leading to a bottoming out of steel prices with weak fluctuations [1][2][3] Supply and Demand Analysis - Demand has weakened significantly entering June, with steel mills reducing production intensity through increased maintenance, resulting in a decline in pig iron and finished steel output [1] - As of June 13, the prices for five major steel products were reported at 3208 CNY/ton for rebar, 3544 CNY/ton for wire rod, 3198 CNY/ton for hot-rolled, 3623 CNY/ton for cold-rolled, and 3421 CNY/ton for medium plate, showing week-on-week changes of -0.33%, -0.40%, -0.80%, -0.64%, and -0.87% respectively [1] - Total steel production last week was 8.5885 million tons, a decrease of 215,300 tons week-on-week [1] Inventory and Consumption - Total steel inventory was 13.5456 million tons, down by 92,500 tons week-on-week, with social inventory decreasing by 35,300 tons to 9.2748 million tons and steel mill inventory down by 57,200 tons to 4.2708 million tons [2] - The apparent consumption of the five major steel products last week was 8.681 million tons, a decrease of 140,700 tons week-on-week [2] Cost and Profitability - The average pig iron cost for 114 steel mills was reported at 2321 CNY/ton, down by 41 CNY/ton week-on-week [2] - As of June 13, the gross profit per ton for high furnace rebar, hot-rolled coil, and cold-rolled coil was +135 CNY/ton, +60 CNY/ton, and -65 CNY/ton respectively, with week-on-week changes of +36 CNY/ton, +27 CNY/ton, and -3 CNY/ton [2] - 58.44% of sampled steel companies were profitable last week, a decrease of 0.43 percentage points week-on-week [2] Market Outlook - The current decline in raw material prices has provided some cost relief for steel mills, supporting profit recovery, although demand remains weak [3] - If crude steel regulation is effectively implemented, supply may decrease, potentially improving the supply-demand relationship and supporting steel prices [3] Investment Recommendations - The steel sector is currently undervalued, with some quality steel companies trading at low price-to-book (PB) ratios compared to 2022 levels [4] - The industry is in a profit recovery phase, with potential for further improvement if industry conflicts are resolved [4] - Recommended stocks include: Hualing Steel (000932), Shougang Co. (000959), Sangang Minmetals (002110), Xinsteel Co. (600782), and Xinxing Ductile Iron Pipes (000778) for low PB; and Zhongnan Co. (000717) and Bayi Steel (600581) for regional advantages [4]

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - Seasonal demand is weakening, but production restrictions are expected to provide support [1] - The report highlights that the overall inventory of five major steel products is 9.3 million tons, with a year-to-date increase of 22.7% [5] - The total inventory at steel mills is 4.33 million tons, reflecting a year-to-date increase of 23.6% [5] - Iron ore port inventory stands at 13.83 million tons, with a year-to-date increase of 6.9% [5] Price Trends - The SW Steel Index is at 2,119, with a weekly change of -0.2% and a year-to-date change of 0.8% [3] - Rebar (HRB400 20mm) price is 3,140 CNY/ton, with a weekly increase of 0.3% and a year-to-date increase of 7.9% [3] - Hot-rolled coil price is 3,097 CNY/ton, with a weekly increase of 0.1% and a year-to-date decrease of 9.5% [3] - Cold-rolled steel price is 3,640 CNY/ton, with a weekly increase of 2.8% and a year-to-date increase of 11.4% [3] Supply and Demand - The average daily pig iron output is projected to be around 230,000 tons [9] - The report indicates that the steel mills' operating rate is fluctuating, impacting overall production [12] - The apparent demand for rebar is noted to be significant, with ongoing monitoring of market conditions [14]

Investment Rating - The industry investment rating is "Positive" [1] Core Viewpoints - Seasonal demand is weakening, but production restrictions are expected to provide support [1] - The report highlights that the overall inventory of five major steel products is 930 thousand tons, with a year-to-date increase of 22.7% [5] - The total inventory at steel mills is 433 thousand tons, reflecting a year-to-date increase of 23.6% [5] - Iron ore port inventory stands at 13.83 million tons, with a year-to-date increase of 6.9% [5] Price Data Summary - The SW Steel Index is at 2,119, with a weekly change of -0.2% and a year-to-date change of 0.8% [3] - Rebar (HRB400 20mm) price is 3,140 CNY/ton, with a weekly change of 0.3% and a year-to-date change of 7.9% [3] - Hot-rolled coil price is 3,230 CNY/ton, with a weekly change of 0.3% and a year-to-date change of 5.6% [3] - Cold-rolled steel price is 3,640 CNY/ton, with a weekly change of 2.8% and a year-to-date change of -11.4% [3] Supply and Demand Summary - The average daily pig iron output is projected to be around 230 thousand tons [9] - The report indicates that the apparent demand for rebar is measured in ten thousand tons [14]

Investment Rating - The industry investment rating is optimistic [1][24]. Core Viewpoints - The report emphasizes the importance of bottom positioning during the off-season for the steel industry [1]. - It highlights the recent trends in steel prices and inventory levels, indicating a potential for recovery [3][5]. Price Trends - The SW Steel Index is at 2,124, with a weekly decline of 0.7% and a year-to-date increase of 1.0% [3]. - The price of rebar (HRB400 20mm) is 3,130 CNY/ton, showing a weekly decrease of 0.9% and a year-to-date decline of 8.2% [3]. - Hot-rolled coil is priced at 3,160 CNY/ton, with a weekly drop of 2.5% and a year-to-date decrease of 7.6% [3]. Inventory Levels - The total social inventory of five major steel products is 9.31 million tons, reflecting a weekly decrease of 2.9% and a year-to-date increase of 22.8% [5]. - The total inventory at steel mills is 4.33 million tons, with a weekly decline of 10.1% and a year-to-date increase of 23.7% [5]. - Iron ore port inventory stands at 13.86 million tons, unchanged week-on-week but up 6.7% year-to-date [5]. Supply and Demand - The weekly output of five major steel products is projected to be stable, with daily average pig iron production expected to maintain current levels [9][12]. - The report indicates a steady demand for rebar, with apparent demand figures showing resilience [15].

Production Capacity and Output - The production capacity of the company's Sanming base is approximately 6.27 million tons of crude steel, with main products including medium plates, round steel, and construction materials [1] - The Quanzhou base produces about 2.57 million tons of crude steel, primarily focusing on construction materials [2] - The Luoyuan base has a crude steel output of approximately 2.57 million tons, mainly producing construction materials [2] Fuel Procurement - The company has a stable supply for coke and coking coal, with long-term contracts accounting for about 66.67% of procurement [2] Capital Expenditure and Production Upgrades - The company’s capacity replacement and ultra-low emission transformation projects are nearing completion, with a planned completion date for the Quanzhou steelmaking and supporting projects by the end of October 2025 [2] - The capital expenditure plan for 2025 is set at 1.99 billion yuan, significantly reduced compared to previous years [2] Dividend Policy - The company has not distributed dividends for two consecutive years due to reported losses in 2023 and 2024, which do not meet the conditions for cash dividends [2] Mergers and Acquisitions - There are currently no plans for mergers or acquisitions, although the company is monitoring new capacity replacement management regulations that may impact the industry [2] Industry Regulations - The company acknowledges the necessity of recent policies aimed at eliminating outdated and inefficient steel production capacity, viewing them as beneficial for industry health [3][4]