Group 1: Steel Industry Outlook - The steel industry's mid-cycle outlook faces challenges due to weak demand and tariff barriers, with companies like Tata Steel, Nucor, and Steel Dynamics expected to maintain relative premium due to favorable demand prospects and tariff protections [3][5] - Chinese steel companies are anticipated to improve profitability due to demand recovery and production cuts, with a year-on-year demand growth of 4.3% driven mainly by the automotive and machinery sectors, while exports grew by 9.2% [5][6] - North American steel producers have an optimistic outlook despite uncertainties from tariff policy changes and infrastructure investment delays, with a projected 3% decline in steel demand in 2024 followed by a 2% rebound in 2025 [12][14] Group 2: Copper Industry Insights - U.S. copper tariffs aim to encourage supply repatriation, but limited smelting capacity and slow approval processes hinder this goal, leading to continued reliance on imports [7][8] - Freeport-McMoRan is expected to benefit from increased sales, as U.S. refined copper production in 2024 is projected at 850,000 tons, meeting less than half of the demand [7][8] Group 3: Silver Market Dynamics - Silver is expected to be revalued further, driven by strong industrial demand, with the gold-silver ratio potentially moving from 90 to 80 as macroeconomic factors shift [10][11]

Core Viewpoint - Baogang Group's hot-rolled coil products have received a low-carbon emission steel certificate, marking a significant breakthrough in promoting green and low-carbon development and enhancing product "green content" [1][3]. Group 1 - The low-carbon hot-rolled coil products were certified during the 14th China International Steel Conference, organized by the China Iron and Steel Association [1]. - Baogang's low-carbon energy center conducted thorough calculations to achieve carbon reduction targets, leading to the development of a low-carbon emission steel production plan [3]. - The successful production of low-carbon emission steel was achieved on June 29, 2025, meeting the carbon efficiency E-level requirements set by the China Iron and Steel Association [3]. Group 2 - Baogang Group launched its green low-carbon brand and low-carbon emission steel process roadmap in September last year, establishing two main series: "low-carbon emission rare earth steel" and "low-carbon emission steel" [5]. - The technical team utilized Life Cycle Assessment (LCA) technology to accurately measure carbon footprints, ultimately determining a carbon reduction process that achieves over 40% reduction [5]. - Baogang is the second company in China's steel industry to conduct LCA research, having published 10 Environmental Product Declarations (EPD) and one carbon footprint report covering various products [5].

Core Viewpoint - The report provides a comprehensive overview of domestic commodity basis data as of July 31, highlighting the differences between spot prices and futures contract prices across various commodities, indicating market trends and potential investment opportunities [1][2]. Group 1: Commodity Basis Data - Copper shows a spot price of 78,500 with a futures closing price of 78,040, resulting in a basis of 460 and a basis rate of 0.59% [1]. - Zinc has a spot price of 22,320 and a futures price of 22,345, leading to a negative basis of -52 and a basis rate of -0.11% [1]. - Aluminum's spot price is 16,625, while the futures price is 16,735, resulting in a basis of -110 and a basis rate of -0.66% [1]. - The basis for rebar steel is 165 with a spot price of 3,370 and a futures price of 3,205, indicating a strong basis rate of 4.90% [1]. - The basis for paper pulp is notably high at 618, with a spot price of 5,850 and a futures price of 5,232, reflecting a basis rate of 10.56% [1]. Group 2: Price Changes and Trends - The price of cotton increased by 1,675 to reach 15,325, showing a significant rise of 10.93% [2]. - Industrial silicon has a spot price of 9,850, with a futures price of 8,760, resulting in a basis of 1,090 and a basis rate of 11.07% [2]. - The price of palm oil increased by 40 to 8,940, reflecting a slight rise of 0.45% [2]. - The price of eggs decreased by 282 to 3,240, indicating a decline of 8.70% [2]. - The price of sugar increased by 162 to 5,955, showing a rise of 2.72% [2]. Group 3: Market Insights - The report indicates that the basis rates for various commodities vary significantly, with some commodities like paper pulp and industrial silicon showing strong positive basis rates, suggesting potential investment opportunities [1][2]. - The fluctuations in prices across different commodities highlight the volatility in the market, which could impact investment strategies [1][2]. - The data reflects the overall health of the commodity market, with certain commodities experiencing price increases while others face declines, indicating a mixed market sentiment [1][2].

Core Viewpoint - The U.S. steel industry is currently experiencing a tight supply situation driven by tariff policies, leading to a short-term maintenance of high steel prices and a potential long-term upward shift in price levels [1][3]. Supply - The U.S. is the only major market globally with a tight supply and high reliance on imports, with an estimated net import volume accounting for about 20% of consumption in 2024, making it the largest net importer [3][21]. - The U.S. steel supply is characterized by a high proportion of electric arc furnace (EAF) steel, with around 70% of crude steel production coming from EAFs, significantly higher than the global average of 30% [3][5]. - Approximately 7 million tons of crude steel capacity is expected to be released in the medium term, primarily from EAFs, which may partially replace imports and maintain a healthy and flexible supply [3][19]. Demand - The automotive sector represents a significant portion of U.S. steel demand, with an estimated consumption of 89 million tons in 2024, where construction, automotive, and machinery account for approximately 44%, 28%, and 9% respectively [4][33]. - Policy-driven improvements in demand are anticipated, particularly in non-residential construction and automotive sectors, due to tariffs on imported vehicles and increased domestic production [4][39]. Price - U.S. hot-rolled coil (HRC) prices have increased by 35% since the beginning of 2025, reaching $900 per ton, with expectations of maintaining high prices in the short term due to tariff impacts [1][42]. - The price of U.S. steel is influenced by trade protection policies, with a potential for upward movement in the long term as EAF production increases and the supply of quality scrap steel becomes a critical resource [47][48]. Industry Dynamics - The U.S. steel industry has undergone significant consolidation, with the top four companies controlling over 80% of the market share, a trend that has intensified since 2000 [5][15]. - The recent acquisition of U.S. Steel by Nippon Steel is expected to have profound implications for all stakeholders involved, including potential improvements in competitiveness and market share for U.S. Steel [48][49].

Core Viewpoint - Despite a downturn in the construction industry leading to weakened steel demand, China continues to maintain high production levels and is exporting large quantities to neighboring countries, resulting in increased trade friction surrounding steel products [1][2]. Group 1: Steel Demand and Prices - The circulating price of hot-rolled steel plates in the Tokyo area is approximately 112,500 yen per ton, a decrease of 4% compared to the end of June, marking the lowest level since August 2021 [2]. - Japan's steel demand is low due to factors such as uncertainty related to U.S. tariff policies, labor shortages, and extreme heat, which hinder construction projects [2]. - In June, China's steel exports reached 9.67 million tons, a year-on-year increase of 10.7%, while total exports from January to June amounted to 58.14 million tons, a historical high for the same period [2]. Group 2: Trade Friction and Anti-Dumping Measures - Japan is initiating an anti-dumping tariff investigation on nickel-based stainless steel cold-rolled sheets and cold-rolled steel plates, targeting products from mainland China and Taiwan [3]. - The global number of anti-dumping investigations related to steel reached a historical high of 41 in 2024, with 30 cases specifically targeting China [3]. - Countries are increasingly seeking to exclude low-priced imported steel, leading to an oversupply of Chinese steel in the market [3].

Group 1 - The South Korean government announced a 21.62% anti-dumping tax on Chinese stainless steel plates for five years, escalating trade tensions despite previous commitments to ease relations with China [1][3] - In response, China extended anti-dumping duties on stainless steel billets and hot-rolled coils from South Korea, the EU, the UK, and Indonesia, with rates as high as 103.1% [3][4] - The steel industry is crucial for China's manufacturing sector, and the anti-dumping measures reflect a strategic response to protect domestic industries from external low-price dumping [4][14] Group 2 - South Korea's actions are part of a broader strategy that includes investigations into various steel and chemical products, indicating a comprehensive approach to trade protection [3][4] - The anti-dumping measures from China are based on a systematic logic, with a history of investigations dating back to 2019, and are designed to prevent Korean companies from benefiting from the expiration of previous tariffs [4][14] - The trade conflict is influenced by U.S. pressure, as South Korea faces potential automotive tariffs from the U.S. if it does not impose higher tariffs on Chinese steel products [6][7] Group 3 - The South Korean steel and chemical industries are under significant pressure, with capacity utilization rates projected to drop from 82% in 2023 to 68% by 2025, leading to potential closures of over 30 small and medium-sized steel firms [7][11] - China's anti-dumping measures include exemptions for certain companies, such as POSCO, if they maintain export prices above a specified threshold, indicating a more nuanced approach compared to South Korea's blanket measures [4][5] - The ongoing trade tensions highlight the delicate balance South Korea must maintain in its foreign relations, particularly in the context of its economic dependencies on both the U.S. and China [14][15]

Investment Rating - The investment rating for the company is "Outperform the Market" [4][26]. Core Views - The company is expected to experience a decline in net profit by 38% in 2024, with revenue projected at 322.1 billion yuan, a decrease of 6.5% year-on-year. However, the company maintains a strong cash flow with operating cash flow increasing by 9.6% to 27.74 billion yuan [5][6]. - The company plans to distribute a total dividend of 2.15 billion yuan in the second half of 2024, which, along with previously distributed cash dividends and share buybacks, will total 5.31 billion yuan, representing 72.1% of the net profit attributable to shareholders [5][6]. - The company is focusing on product structure upgrades and maintaining stable operations despite industry pressures, with steel sales expected to remain flat at 51.6 million tons in 2024 [6][26]. Financial Performance and Projections - For 2024, the company is projected to achieve revenue of 322.1 billion yuan and a net profit of 7.36 billion yuan, with a significant recovery expected in 2025, where net profit is forecasted to rise to 9.75 billion yuan, reflecting a year-on-year growth of 32.4% [3][26]. - The company plans to produce 48.79 million tons of iron and 52.61 million tons of steel in 2025, with total revenue expected to reach 312 billion yuan [6][25]. - The earnings per share (EPS) is projected to be 0.44 yuan in 2025, with a corresponding price-to-earnings (PE) ratio of 15.6x [26][27].