Core Views Bullish Factors - China's economy shows resilience, and the semiconductor boom boosts nickel demand [3]. - New policies for electric vehicles encourage vehicle registration and usage, stimulating nickel consumption [3]. Bearish Factors - High inventories of LME nickel and SHFE nickel limit the upside potential of nickel prices [3]. - Limited fundamental changes and price drops indicate market pressure [3]. Trading Advisory View - Short - term macro sentiment is rising, supporting nickel prices to fluctuate with a slight upward bias [3]. Market Data Nickel Futures - The latest price of SHFE nickel main contract is 120,940 yuan/ton, down 1,640 yuan (-1.34%) week - on - week [4]. - The latest price of SHFE nickel continuous contract 1 is 121,110 yuan/ton, down 870 yuan (-0.71%) week - on - week [4]. - The latest price of SHFE nickel continuous contract 2 is 121,340 yuan/ton, down 820 yuan (-0.67%) week - on - week [4]. - The latest price of SHFE nickel continuous contract 3 is 121,480 yuan/ton, down 820 yuan (-0.67%) week - on - week [4]. - The latest price of LME nickel 3M is 15,445 dollars/ton, up 225 dollars week - on - week [4]. Stainless Steel Futures - The latest price of stainless steel main contract is 12,875 yuan/ton, down 195 yuan (-1%) week - on - week [4]. - The latest price of stainless steel continuous contract 1 is 12,875 yuan/ton, up 15 yuan (0.12%) week - on - week [4]. - The latest price of stainless steel continuous contract 2 is 12,925 yuan/ton, down 25 yuan (-0.19%) week - on - week [4]. - The latest price of stainless steel continuous contract 3 is 12,990 yuan/ton, up 5 yuan (0.04%) week - on - week [4]. Other Data - The position volume is 55,044 lots, down 15,566 lots (-22.1%) week - on - week [4]. - The trading volume is 81,612 lots, down 21,067 lots (-20.52%) week - on - week [4]. - The warehouse receipt quantity is 25,866 tons, up 2,337 tons (9.93%) week - on - week [4]. - The basis of the main contract is 10 yuan/ton, down 920 yuan (-101.10%) week - on - week [4]. Spot Prices - The latest price of Jinchuan nickel is 123,800 yuan/ton, down 100 yuan (-0.08%) [4]. - The latest price of imported nickel is 121,900 yuan/ton, down 100 yuan (-0.08%) [4]. - The latest price of 1 electrolytic nickel is 122,700 yuan/ton, down 100 yuan (-0.08%) [4]. - The latest price of nickel beans is 124,050 yuan/ton, down 100 yuan (-0.08%) [4]. - The latest price of electrowon nickel is 121,700 yuan/ton, down 50 yuan (-0.04%) [4]. Inventory Data - Domestic social inventory is 41,055 tons, up 1,125 tons [4]. - LME nickel inventory is 228,450 tons, down 18 tons [6]. - Stainless steel social inventory is 897.2 tons, down 5.4 tons [6]. - Nickel pig iron inventory is 28,652 tons, down 614.5 tons [6]. Charts and Information Nickel Market - There are charts showing the price trends of SHFE nickel futures main contract, LME nickel (3 - month) electronic - trading price, nickel spot average price, and nickel supply and inventory data including China's refined nickel monthly output, total domestic primary nickel supply, domestic social inventory, LME nickel inventory, Philippine laterite nickel ore price, Chinese port nickel ore inventory, Chinese and Indonesian nickel pig iron output [7][8][11][12][13][14][15][16][17][18][19][20][21]. Downstream of Nickel - There are charts about downstream products of nickel such as battery - grade nickel sulfate price, premium, production profit margins of nickel beans producing nickel sulfate and electrowon nickel from externally - purchased nickel sulfate, China's nickel sulfate monthly output, and ternary precursor monthly production capacity [22][23][24][25][26][27]. Stainless Steel Market - There are charts presenting the price trend of stainless steel futures main contract, stainless steel inventory, 304 stainless steel cold - rolled coil profit margin, and stainless steel monthly output [9][10][30][31][32].

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - For nickel, on September 2nd, the Shanghai nickel main - contract first rose then declined, with reduced trading volume and open interest. The spot market had weak trading, and basis premium widened. The supply side saw stable nickel ore prices, decreased nickel ore arrivals last week, and increased port inventories. Ferronickel plant losses narrowed, with increased domestic and Indonesian production and decreased ferronickel inventory. In September, domestic electrolytic nickel production increased, and export profitability shrank. The demand side had reduced ternary production, increased stainless - steel mill production, and stable alloy and electroplating demand. Considering inventory changes and external factors like the Fed's interest - rate cut expectations and Indonesian unrest, nickel prices are expected to fluctuate widely. It is recommended to wait and see [2]. - For stainless steel, on September 2nd, the stainless - steel main - contract fluctuated at a high level, with reduced trading volume and open interest. The spot market had better low - price trading, and basis premium decreased. The inventory in the Shanghai Futures Exchange increased, and the social inventory of 300 - series stainless steel decreased last week. The supply side will see increased stainless - steel production in September. The demand side has weak terminal demand, while the cost side has rising high - grade ferronickel and high - carbon ferrochrome prices. Given the large impact of macro - sentiment, although the fundamentals are loose, cost provides support, so stainless - steel prices are expected to fluctuate within a range. It is also recommended to wait and see [2]. 3. Summary by Related Content Nickel Market - **Futures Market**: The closing prices of nickel futures contracts (near - month, continuous - one, continuous - two, continuous - three) decreased compared to the previous day. The trading volume of Shanghai nickel decreased by 43,115 hands to 128,782 hands, and the open interest decreased by 1,201 hands to 90,762 hands. The LME 3 - month nickel price fell 1.29%. The price difference between near - month and far - month contracts and the basis between spot and futures changed [2]. - **Spot Market**: The average prices of various nickel products (nickel beans, electrolytic nickel, ferronickel, etc.) mostly decreased. The premium of 1 Jinchuan nickel to the Shanghai nickel contract decreased, while the premium of 1 imported nickel (Russian nickel) remained stable [2]. - **Inventory**: The inventory in the Shanghai Futures Exchange increased, the LME nickel inventory increased, the social inventory of pure nickel decreased by 1,402 tons, and the inventory in the Shanghai bonded area remained unchanged [2]. - **Industry News**: In August, the wholesale sales of new - energy passenger vehicles in China reached 1.3 million, a year - on - year increase of 24%. Greenmei stated that its nickel project in Indonesia was operating normally without being affected by local unrest. The Indonesian nickel ore association reported that the nickel price in this cycle decreased compared to the previous one, with the September 1st nickel ore reference price (HMA) set at $14,999.64 per kiloton, lower than the previous cycle. Some nickel products' prices showed different trends, with the MHP price rising significantly [2]. Stainless - Steel Market - **Futures Market**: The closing prices of stainless - steel futures contracts (near - month, continuous - one, continuous - two, continuous - three) had different changes. The trading volume of the Shanghai stainless - steel main - contract decreased by 34,264 hands to 130,629 hands, and the open interest decreased by 9,528 hands to 91,035 hands [2]. - **Spot Market**: The average prices of various stainless - steel products (304 series, 316 series, etc.) had different changes, with some prices rising and some remaining stable. The basis between the 304/2B coil (Wuxi) average price and the active contract decreased by 10 [2]. - **Inventory**: The inventory in the Shanghai Futures Exchange increased, and the social inventory of stainless - steel decreased by 3,200 tons. Among them, the inventory of 200 - series stainless steel increased by 2,400 tons, the inventory of 300 - series decreased by 3,300 tons, and the inventory of 400 - series decreased by 2,300 tons [2]. - **Supply and Demand**: In September, stainless - steel production is expected to increase, but terminal demand is weak. The cost side has rising high - grade ferronickel and high - carbon ferrochrome prices [2].

1. Report Investment Rating No investment rating for the industry is provided in the report. 2. Core Views - For electrolytic nickel, wait for short - selling opportunities at high prices after the Indonesian riots subside. The price is expected to fluctuate widely in the range of 116,000 - 127,000 yuan/ton due to loose supply - demand and high production despite supply concerns from the riots and fluctuating Fed rate - cut expectations [3][90]. - For stainless steel, the recommended strategy is to wait and see. The price is expected to oscillate between 12,500 - 13,500 yuan/ton because of increased production, average demand, but strong cost support [4][116]. 3. Summary by Directory 1.1 Nickel Market Review - Last week, SHFE nickel rose 1.75% weekly, with trading volume reaching 671,400 lots (+263,900) and open interest at 89,600 lots (-21,800). LME nickel rose 2.13% weekly, with trading volume at 28,300 lots (-900) [10]. - The basis showed a premium of 850 yuan/ton [12]. 1.2 Supply Side Nickel Ore - Last week, the prices of 0.9%, 1.5%, and 1.8% nickel ores remained flat, while the shipping price from the Philippines to China increased [18]. - In June, Philippine nickel ore exports rose. In July, China's nickel ore imports reached 5.01 million tons, up 15.2% month - on - month and 43.6% year - on - year [22]. - Last week, nickel ore arrivals decreased by 308,200 tons, and port inventories increased by 540,000 wet tons [24]. Nickel Pig Iron - The price of 8 - 12% high - nickel pig iron rose 12.5 yuan/nickel point, and 1.5 - 1.7% nickel pig iron rose 20 yuan/ton. The negative premium of nickel pig iron to electrolytic nickel widened, and that to scrap stainless steel narrowed [30]. - In July, China's nickel pig iron imports were 836,000 tons, down 19.7% month - on - month but up 1.8% year - on - year. August imports are expected to be flat [34]. - Nickel iron mills' losses shrank, and the operating rate increased. In August, domestic nickel pig iron production and operating rate rose, and in September, Indonesia's did the same. Nickel iron inventory decreased [36][41][43]. Electrolytic Nickel - In September, the operating rate and production of refined nickel increased, and export profitability expanded [47][52]. - In July, both imports and exports of electrolytic nickel increased [56]. 1.3 Demand Side Stainless Steel - In September, stainless steel production plans increased, especially for 300 - series stainless steel [61]. - In July, stainless steel exports increased by 6.7% month - on - month and 1.4% year - on - year, while imports decreased by 33.3% month - on - month and 39.0% year - on - year. Exports and imports are expected to decline in August [65]. New Energy - The premium of battery - grade nickel sulfate to pure nickel narrowed, and the proportion of pure nickel used to produce nickel sulfate was minimal [71]. - In September, the production plan of ternary precursors increased by 12.9% month - on - month and 3.9% year - on - year, while that of ternary materials decreased by 1.5% month - on - month but increased by 26.2% year - on - year [74]. - In August, the production plan of nickel sulfate decreased by 2.5% month - on - month and 10.9% year - on - year [76]. - In July, new energy vehicle production was 1.243 million units, down 2.0% month - on - month but up 26.3% year - on - year, and sales were 1.262 million units, down 5.1% month - on - month but up 27.4% year - on - year [81]. 1.4 Inventory Side - Last week, SHFE nickel inventory decreased, and LME inventory increased [82]. - Shanghai bonded - area pure nickel inventory remained flat, and the six - region social inventory decreased by 1,402 tons [86]. 1.5 Electrowinning Nickel Cost - The cost of producing electrowinning nickel from externally sourced nickel sulfate, nickel matte, and MHP increased. MHP integrated production of electrowinning nickel had a significant cost advantage over high - nickel matte [89]. 1.5 Market Outlook for Nickel - Strategy: Wait for short - selling opportunities at high prices after the Indonesian riots subside. - Operating range: 116,000 - 127,000 yuan/ton. - Logic: Supply - side factors include stable nickel ore prices, decreased arrivals, and increased port inventories; narrowing losses for domestic iron mills, decreased domestic production plans, increased Indonesian production plans, and reduced nickel iron inventories; increased refined nickel production and expanded export profitability. Demand - side factors are decreased ternary material production plans, increased precursor production plans, increased stainless - steel mill production plans, and stable alloy electroplating demand. Inventory - side factors are decreased pure nickel social inventory and stable bonded - area inventory. Overall, despite Fed rate - cut uncertainties and supply concerns from the riots, high pure nickel production leads to loose supply - demand and expected wide - range price fluctuations [90]. 2.2 Cost and Profit for Stainless Steel - High - nickel pig iron and high - carbon ferrochrome prices increased, providing strong cost support [97]. - The losses of 200 - series stainless steel widened, those of 300 - series narrowed, and those of 400 - series widened [101]. 2.3 Fundamental Aspects of Stainless Steel - In September, stainless steel production plans increased, especially for 300 - series stainless steel [105]. - In July, stainless steel exports increased, and imports decreased. Exports and imports are expected to decline in August [108]. 2.4 Inventory Side for Stainless Steel - Domestic stainless - steel social inventory decreased. 200 - series inventory increased, while 300 - series and 400 - series decreased [114]. 2.5 Market Outlook for Stainless Steel - Strategy: Wait and see. - Operating range: 12,500 - 13,500 yuan/ton. - Logic: With increased production, average demand, strong cost support, and overall and 300 - series inventory reduction, the stainless - steel market is expected to oscillate within a range [116].

Core View - Bullish factors include improved stainless steel mill profits leading to increased production, rising new energy vehicle sales boosting demand, strong cost support at the lower end, a falling US dollar index lifting nickel prices, and an improved macro - environment [3] - Bearish factors are high stainless steel inventories, declining demand for new energy ternary batteries suppressing nickel consumption, increasing global nickel ore supply and rising production, and a rebounding US dollar increasing cost pressure [3] - The trading advisory view is that the fundamentals are weak, but the increase in downstream procurement volume leads to significant divergence between bulls and bears [3] Market Data Nickel - The latest values of Shanghai nickel futures contracts (main, continuous 1, continuous 2, continuous 3) are 120990 yuan/ton, 120990 yuan/ton, 121110 yuan/ton, and 121300 yuan/ton respectively, with weekly increases of 0.57%, 1.15%, 1.09%, and 1.09% [4] - LME nickel 3M is at 15190 dollars/ton, up 1.04% weekly [4] - The positions decreased by 16.4% to 92205 hands, trading volume increased by 8.94% to 129831 hands, and the number of warehouse receipts decreased by 2.39% to 22013 tons [4] - The basis of the main contract is - 1060 yuan/ton, down 7.83% [4] - The spot prices of金川 nickel, imported nickel, 1 electrolytic nickel, and nickel beans are 122850 yuan/ton, 120950 yuan/ton, 121750 yuan/ton, and 123050 yuan/ton respectively, with daily decreases of 1.25%, 1.10%, 1.14%, and 1.05% [4] - The domestic social inventory of nickel is 40872 tons, a decrease of 1019 tons; LME nickel inventory is 209676 tons, an increase of 456 tons [4][7] Stainless Steel - The latest values of stainless steel futures contracts (main, continuous 1, continuous 2, continuous 3) are 12850 yuan/ton, 12850 yuan/ton, 12915 yuan/ton, and 12980 yuan/ton respectively, with the main contract unchanged, and continuous 1, 2, 3 up 0.78%, 0.70%, and 0.89% weekly [4] - The trading volume decreased by 22.05% to 121866 hands, positions decreased by 10.48% to 127116 hands, and the number of warehouse receipts decreased by 1.47% to 100431 tons [4] - The basis of the main contract is 620 yuan/ton, down 13.89% [4] - The stainless steel social inventory is 928.8 thousand tons, a decrease of 4.6 thousand tons; nickel pig iron inventory is 33111 tons, a decrease of 304 tons [7] Charts - There are charts showing the trends of Shanghai nickel and LME nickel futures main contracts, stainless steel futures main contract, nickel spot average price, China's refined nickel monthly production, China's primary nickel total monthly supply, domestic social nickel inventory, LME nickel inventory, Philippine laterite nickel ore price, China's port nickel ore inventory, China's nickel - iron monthly production, Indonesia's nickel pig iron monthly production, battery - grade nickel sulfate average price, nickel - bean - produced nickel sulfate profit margin, China's externally - sourced nickel - sulfate - produced electrowon nickel profit, China's nickel sulfate monthly production, ternary precursor monthly production capacity, China's 304 stainless steel cold - rolled coil profit margin, stainless steel monthly production, and stainless steel inventory [9][11][13][15][16][17][20][22][24][26][28][29][31][33]

Report Information - Report Title: Nickel and Stainless Steel Weekly Report: Still Lack of Drivers [1] - Report Date: August 26, 2025 [2] - Research Institute: Hongyuan Futures Research Institute [2] - Analyst: Wu Jinheng [2] 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Report Core Views - For electrolytic nickel, the strategy is to wait and see, with an expected price range of 116,000 - 126,000 yuan/ton. Given high pure nickel production, loose supply - demand, and fluctuating Fed rate - cut expectations, nickel prices are expected to fluctuate within the range [3][89]. - For stainless steel, the strategy is also to wait and see, with an expected price range of 12,500 - 13,500 yuan/ton. Despite production recovery, average demand, and existing inventory pressure, strong cost support and the "anti - involution" sentiment suggest that stainless steel prices will fluctuate within the range [4][115]. 3. Summary by Relevant Catalogs 3.1 Nickel Market Review - Last week, SHFE nickel fluctuated downward, with a weekly decline of 0.89%. Trading volume decreased to 407,500 lots (- 80,800), and open interest increased to 111,400 lots (+ 2,100). LME nickel fell 0.40% weekly, with trading volume rising to 29,200 lots (+ 800) [10]. - The basis was at a premium of 940 yuan/ton [12]. 3.2 Supply Side 3.2.1 Nickel Ore - Last week, prices of 0.9%, 1.5%, and 1.8% nickel ores remained flat, and the shipping price from the Philippines to China was unchanged [18]. - In June, Philippine nickel ore exports increased. In July, China's nickel ore imports reached 5.01 million tons, up 15.2% month - on - month and 43.6% year - on - year [22]. - Last week, nickel ore arrivals increased by 306,300 tons, and port inventories rose by 440,000 wet tons [24]. 3.2.2 Nickel Pig Iron - The price of 8 - 12% high - nickel pig iron rose by 4.5 yuan/nickel point, while the price of 1.5 - 1.7% nickel pig iron was flat. The negative premium of nickel pig iron to electrolytic nickel and scrap stainless steel narrowed [30]. - In July, China's nickel pig iron imports were 836,000 tons, down 19.7% month - on - month but up 1.8% year - on - year. August imports are expected to be flat [33]. - Nickel pig iron producers' losses widened, but the operating rate increased. In August, domestic production and operating rates declined, while those in Indonesia slightly increased. Nickel pig iron inventories slightly decreased [35][39][43]. 3.2.3 Electrolytic Nickel - In August, the operating rate and production schedule of refined nickel increased. The profitability of electrolytic nickel exports decreased. In July, both imports and exports of electrolytic nickel increased [47][51][54]. 3.3 Demand Side 3.3.1 Stainless Steel - In August, stainless steel production schedules increased, including those for 300 - series stainless steel. In July, exports rose 6.7% month - on - month and 1.4% year - on - year, while imports fell 33.3% month - on - month and 39.0% year - on - year. August imports and exports are expected to decline [59][63]. 3.3.2 New Energy - The price of pure nickel fell, while that of nickel sulfate rose, widening the premium of nickel sulfate to pure nickel. The proportion of pure nickel used in nickel sulfate production was minimal [68]. - In August, production schedules for ternary precursors and materials increased, while that for nickel sulfate decreased [72][74]. - In July, new energy vehicle production was 1.243 million units, down 2.0% month - on - month but up 26.3% year - on - year, and sales were 1.262 million units, down 5.1% month - on - month but up 27.4% year - on - year [80]. 3.4 Inventory Side - Last week, SHFE and LME nickel inventories decreased. Shanghai Free Trade Zone nickel inventories were flat, and the six - region social total inventory decreased by 1,019 tons [81][85]. 3.5 Electrowinning Nickel Cost - The cost of producing electrowinning nickel from externally sourced nickel sulfate and nickel matte increased, while that from externally sourced MHP decreased. MHP integrated production of electrowinning nickel had a significant cost advantage over high - matte integrated production [88]. 3.6 Stainless Steel Market - Last week, stainless steel futures fluctuated downward, with a weekly decline of 2.04%. The basis widened to 915 yuan/ton. Trading volume was 619,000 lots (- 178,900), and open interest was 144,500 lots (+ 10,200) [92]. - High - nickel pig iron and high - carbon ferrochrome prices rose, providing strong cost support. Losses for 200 - series and 300 - series stainless steel widened, while those for 400 - series stainless steel narrowed [95][100]. - Domestic stainless steel social inventories increased. 200 - series inventories decreased, while 300 - series and 400 - series inventories increased [113].

Group 1: Nickel Price Trends - Nickel prices have shown a fluctuating pattern since July, reaching a peak of 125,370 CNY/ton in late July due to new policies aimed at stabilizing growth in key industries [1] - As positive market sentiments are digested, nickel prices are expected to continue in a range-bound trend in August, influenced by both supportive and adverse factors [1] Group 2: Supply Dynamics - Global nickel ore production reached 1.6463 million tons from January to May 2025, with May's production at 346,200 tons, indicating a generally loose supply [1] - Indonesia's nickel ore production quota has been raised, but operational challenges have led to the shutdown of approximately 28 RKEF production lines, resulting in lower actual production [1] - China's nickel ore imports in July were at a five-year high, contributing to a continuous accumulation of nickel ore inventory at ports [1] Group 3: Stainless Steel Industry - The stainless steel industry in both Indonesia and China is currently in a traditional off-season, leading to reduced demand and production [2] - Domestic stainless steel crude steel production has declined for four consecutive months, with July's output down by 300,000 tons from February's peak [2] - Despite the challenges, there are expectations for a rebound in production as the off-season ends, which may support nickel prices [2] Group 4: Battery and Plating Sectors - From January to July, domestic sales of new energy vehicles increased by 35%, driving demand for nickel sulfate [3] - However, external risks such as U.S. tariffs on imported cars may slow down growth in nickel consumption in the battery and plating sectors [3] Group 5: Alloy Demand - China's automobile production rose by 12.6% from January to July, bolstering alloy nickel consumption [4] - Domestic refined nickel production saw a significant increase of 41% year-on-year in the first half of 2025, reaching a four-year high [4] - Nonetheless, rising external uncertainties, including U.S. tariffs, could negatively impact future nickel consumption in the alloy sector [4] Group 6: Inventory Levels - As of August 19, 2025, LME nickel inventory reached 209,000 tons, a year-on-year increase of 84%, indicating a loose supply environment [6] - High inventory levels are expected to suppress the potential for price rebounds and affect market sentiment [6] Group 7: Market Outlook - The short-term outlook suggests continued range-bound trading for nickel prices, with a focus on macro policy changes and demand recovery signals [6] - The strategy recommendation includes holding a sell position on nickel options, anticipating price fluctuations within a specified range [6]

Investment Rating - The report maintains a "Positive" investment rating for the non-ferrous and steel industry [5] Core Viewpoints - The current period is seen as an investment opportunity for the gold sector, driven by expectations of a potential interest rate cut by the Federal Reserve [8][12][13] - Economic indicators suggest that maintaining high growth is challenging, leading to increased expectations for interest rate cuts [14] - The impact of tariffs is becoming evident, with expectations of rising inflation due to the depletion of low-cost inventories [15] Summary by Sections Gold Sector - The gold sector is viewed as a timely investment opportunity, with recent employment data indicating a shift towards lower growth expectations, enhancing the likelihood of interest rate cuts [13][14] - The average tariff rate in the U.S. has reached 20.1%, which is expected to further influence inflation in the coming quarters [15] Steel Sector - The steel industry is experiencing short-term profit fluctuations but is expected to stabilize and recover in the medium term due to the "anti-involution" policy [16] - Steel consumption has increased by 3.63% week-on-week, while production has shown a mixed trend with a notable rise in rebar production [21][18] - Overall steel inventory has risen, but structural improvements in demand are anticipated [23] - The cost of steel production is expected to stabilize, with short-term cost reduction potential diminishing [27] - Steel prices are projected to continue rising, supported by the "anti-involution" policy [36] New Energy Metals - The production of lithium carbonate in June 2025 saw a significant year-on-year increase of 20.95%, indicating strong supply dynamics [41] - The demand for new energy vehicles remains robust, with production and sales showing substantial growth [45] - Prices for lithium, cobalt, and nickel have generally increased, reflecting strong market conditions [50]

Macro Perspective - The Federal Reserve maintained interest rates during the July meeting, which had a limited impact on nickel prices [2] - Indonesia's government raised nickel ore production quotas from 298.5 million wet tons to 364 million tons, but actual production was only 120 million tons, significantly below the quota [2] - Nickel ore imports in June were 4.35 million tons, down 9% year-on-year, but up 11% month-on-month, leading to an increase in nickel concentrate port inventory to 9.3146 million wet tons, returning to the median level of the past five years [2] Stainless Steel Industry - Both Indonesia and China's stainless steel industries are in a consumption lull, with profits for 200 and 400 series hot-rolled and cold-rolled stainless steel remaining negative, while only the 300 series maintained positive margins [3] - In June, production of hot-rolled stainless steel decreased by 5.5% month-on-month, and cold-rolled stainless steel production fell by 2% [3] - Nickel pig iron (NPI) production profits in China have declined, leading to the lowest operating rates and production levels in nearly four years, with imports of NPI rising by 50% year-on-year in June [3] Battery and Alloy Demand - Domestic sales of new energy vehicles increased by 35% year-on-year in the first half of the year, significantly boosting nickel demand for batteries [4] - Nickel demand for alloys also rose, with refined nickel production reaching 210,000 tons in the first half of the year, a 41% increase year-on-year, marking a four-year high [4] - Nickel inventory levels are at their highest in four years, with LME nickel inventory at 208,000 tons, a 98% year-on-year increase [4] Nickel Price Trends - Nickel prices have been fluctuating within a range since June, with a peak of 125,370 yuan/ton in July due to stimulus measures in key industries [5] - The outlook suggests that nickel prices will continue to fluctuate, especially if Indonesia increases its nickel concentrate production in response to raised quotas [6] - The overall supply-demand balance for refined nickel remains loose, with high inventory levels at LME and SHFE, indicating limited upward price momentum in the short term [6]

Investment Rating - The report maintains a "Positive" investment rating for the non-ferrous and steel industry [5] Core Viewpoints - The report argues that the value reassessment of the strategic metals sector has just begun, contrary to some investors' belief that the recent rapid price increases indicate an impending peak [8][14] - It highlights three dimensions supporting this view: policy measures against strategic mineral smuggling, a tight supply-demand balance driving product prices up, and an increase in risk appetite due to political policy risk premiums [8][14][17] Summary by Sections Strategic Metals - Some investors believe the recent surge in strategic metals prices is unsustainable and may soon peak [8][13] - The report counters this by stating that the value reassessment of strategic metals is just beginning, driven by macroeconomic inflation, tight supply-demand dynamics, and political risk premiums [14][17] - Policy measures to combat strategic mineral smuggling are expected to be reinforced, particularly for rare earths and other strategic metals [15] - The supply-demand balance remains tight, with increasing demand from sectors like new energy vehicles and offshore wind power, leading to rising prices for rare earths [16] - Political policy risk premiums are expected to rise, enhancing the attractiveness of the strategic metals sector [17] Steel Industry - Steel prices are anticipated to continue rising due to production cut expectations [18] - Steel demand and production have decreased, but a dynamic balance in supply and demand is expected [18][25] - Inventory levels are showing differentiation among various steel products, with total inventory likely to decline further [25] - Cost increases in raw materials are pushing steel prices up, with profits for steel mills expected to recover [28] - The overall steel price index has seen a slight increase, with specific products like hot-rolled steel showing notable price rises [35] New Energy Metals - Lithium production in June 2025 saw a significant year-on-year increase of 20.95%, indicating strong supply growth [40] - The demand for new energy vehicles remains robust, with production and sales in June 2025 showing substantial growth [44] - Prices for lithium and cobalt have generally risen, while nickel prices have seen a decline [49][50] Industrial Metals - Global refined copper production has increased, with supply slightly better than expected [57] - The demand outlook is improving, with manufacturing activity expected to continue recovering [69]

Investment Rating - The report maintains a "Positive" investment rating for the non-ferrous and steel industry [5] Core Viewpoints - The current market performance of the non-ferrous steel sector is driven by political policy risk premiums rather than fundamental earnings or growth adjustments [8][14] - There is a significant concern regarding the supply chain security in the context of long-term US-China competition, particularly with strategic metals like copper [15] - The imposition of high tariffs on copper is seen as a market manifestation of political policy risk premiums, influencing inventory behaviors [16] - Non-market strategies, such as US government investments in rare earths, highlight the strategic importance of these materials beyond mere economic considerations [17] Summary by Sections Non-Ferrous and Steel Industry Overview - The report discusses the political policy risk premium affecting the non-ferrous steel sector, suggesting that current valuations may exceed fundamental support [8][14] - It emphasizes the need to consider long-term supply chain and national defense requirements when evaluating market premiums [14] Steel Industry Dynamics - Steel demand and production have both decreased, with a slight week-on-week decline in rebar consumption by 1.50% and a year-on-year drop of 5.85% [18][23] - Total steel inventory is expected to decline further, with social inventory down by 0.23% and year-on-year down by 29.02% [25] - The report anticipates a rebound in steel prices due to industry restructuring and reduced competition, with the overall steel price index rising by 1.14% [38][39] New Energy Metals - In May 2025, China's lithium carbonate production surged by 31.37% year-on-year, indicating strong supply growth [43] - The demand for new energy vehicles remains robust, with production and sales of electric vehicles increasing significantly [47] - Lithium and cobalt prices are on the rise, while nickel prices have shown a downward trend [52][53]