Report Summary 1. Investment Rating No investment rating is provided in the report. 2. Core View The price of iron ore is expected to be resilient in the short term due to the cost increase driven by geopolitical conflicts. The price is likely to maintain a high - level volatile trend, with the lower - bound range expected to move up to $95 - 100 per ton. The sustainability of the price increase depends on energy prices and global demand changes [1][2][17]. 3. Section Summaries Supply - The Middle East is not a core iron ore producing region, and the impact on global iron ore supply is mainly reflected in marginal pricing disturbances. In 2024, Iran exported 22.42 million tons of iron ore, and in 2025, China imported a total of 22.38 million tons of iron ore from Iran and Oman. The proportion of Iran's iron ore exports in global seaborne trade and China's imports is relatively low. So, the halt of Iran's iron ore exports due to the Middle East situation has a limited impact on global iron ore supply [5]. - China mainly imports iron ore concentrates and pellets from Iran and Oman. After the conflict, the premium of these varieties increased but has recently stabilized. The main trade flows of iron ore from Australia and Brazil are not affected by the conflict - affected routes, so the actual impact on the main trade flows is limited [5]. Cost - The escalation of the Middle East situation has led to an increase in crude oil and liquefied natural gas prices, which has directly raised shipping costs and mining costs. After the conflict, the diesel price in Australia rose from 1.69 AUD/L to 2.54 AUD/L. The production cost of Australian iron ore producers has increased, and according to Goldman Sachs' calculation, the unit cost of major Australian iron ore enterprises in the Pilbara region will increase by $2.5 per ton [8]. - The freight rates of major iron ore shipping routes have increased. As of March 27, the freight rate of Capesize vessels from Brazil to China increased from $23.4 per ton to $30.69 per ton, a rise of 31.15%, reaching a one - year high. The freight rate from Australia to China also reached a one - year high [9]. Inventory - The iron ore inventory at Chinese ports has climbed to over 170 million tons, reaching the highest level in the same period in the past five years. In contrast, the steel mills' equity iron ore inventory is at a relatively low level, increasing the pressure on port inventory accumulation [14]. - The BHP trade negotiation issue has restricted the circulation of some mainstream iron ore varieties, creating a situation of overall inventory surplus but structural tightness. This has led to an emotional impact and pushed up the premium of these varieties. If the negotiation issue is resolved, the iron ore price may face downward pressure [14].

Investment Rating - The report does not explicitly state an investment rating for the steel industry, but it implies a cautious outlook based on current market conditions and price trends [93]. Core Insights - The steel industry is experiencing a stable bottom in its fundamentals, with a current profit margin of 39.8% and a loss of 34.6 yuan per ton [11][12]. - The market is facing weak and steady demand, leading to a slight price correction in iron ore due to a lack of further catalysts [11][12]. - The overall sentiment in the steel market is influenced by seasonal inventory replenishment expectations and external factors such as commercial aerospace adjustments [11]. Summary by Sections 1. Steel Industry Overview & Index Performance - Iron ore port inventories have reached high levels, leading to cautious replenishment by steel mills, which has resulted in a slight price correction [11]. - The steel price gap has increased by 4 yuan, indicating a stable bottom in the steel industry fundamentals [11]. 2. Sub-industry Fundamentals Overview - **Steel**: The hot-rolled coil price has shown a slight increase, with an average price of 3317 yuan/ton across 24 major markets [12]. - **Coke and Coal**: The market is stable, with prices for various grades of coke and coal reported, and a cautious recovery in coal mine operations [13]. - **Iron Ore**: The price of imported iron ore has weakened, with a current index of 976 yuan/ton for 66% fines, reflecting a cautious purchasing approach by steel mills [14]. 3. Price Data Updates - **Steel Prices**: The report highlights the price trends for various steel products, including hot-rolled and cold-rolled sheets, indicating a narrow fluctuation in prices [39][45]. - **Raw Material Prices**: The prices for iron ore and coke are detailed, showing stability in the market despite recent fluctuations [46][51]. 4. Supply and Demand Data Updates - **Steel**: The report provides insights into the supply and demand dynamics within the steel industry, noting a cautious approach to inventory replenishment [68]. - **Iron Ore**: The total inventory of imported iron ore at 45 ports is reported at 16555.10 million tons, indicating a slight increase [14]. - **Coke and Coal**: The report discusses the supply situation for coke and coal, with a focus on inventory levels and production rates [80][81].

Financial Performance - The company's revenue for the first three quarters of 2025 was 16.52 billion CNY, representing a year-on-year growth of 18.29% [2] - The net profit attributable to shareholders for the same period was 3.23 billion CNY, with a year-on-year increase of 61.97% [2] - The growth in performance is attributed to the increase in metal prices [2] Production and Operations - The main product of the company is concentrate, with metal quantities needing to be calculated separately, typically disclosed in the annual report [2] - The expected production capacity of Honglin Mining after full production is 396,000 tons/year, with an average gold grade of 2.82 g/t and copper grade of 0.48% [4] - Honglin Mining is currently in the trial production phase, which will last until December 10, 2025 [4] Licensing and Compliance - The safety production license for Honglin Mining is expected to be obtained within 3-6 months after the trial production phase [3] - The company emphasizes the importance of safety production, with significant investments made annually to meet government safety requirements [8] Cost Management - The cost structure is influenced by multiple factors, including safety production requirements and the simplicity of the ore selection process, which helps control costs [8] - Jinshan Mining's technological improvements have primarily reduced the cost of ore selection while increasing the recovery rates of silver and gold [8] Future Growth Expectations - The company anticipates an increase in gold production following the official launch of Honglin Mining [9] - The Dongsheng Mining project, with a capacity of 250,000 tons/year, is under construction and expected to contribute to silver, lead, and zinc production growth [9] - Jinshan Mining's production capacity is projected to gradually increase to 480,000 tons/year, with plans to expand further based on resource availability [9] Shareholding Structure - The company holds a 62.96% stake in Yindu Mining, 100% in Guangda Mining, Jindu Mining, and Jinshan Mining, 54% in Deyun Mining, and 53% in Honglin Mining [10]