Core Viewpoint - The company plans to continue its hedging activities in 2025 to mitigate risks associated with price fluctuations of raw materials and products, thereby enhancing operational stability [1][4]. Summary by Sections Transaction Overview - The purpose of the hedging activities is to avoid risks from significant price fluctuations in raw materials and products, ensuring stable operations [2][3]. - The hedging business will involve various products including steel, iron ore, coking coal, coke, silicon manganese, silicon iron, copper, zinc, and nickel, which are all related to the steel industry [2][3]. - The trading tools will consist of domestic futures, with transactions taking place on domestic futures exchanges [2][3]. - The maximum amount for hedging transactions, including margin and premiums, will not exceed 300 million RMB, and this amount can be used cyclically [2][3]. - The company has established dedicated positions for hedging activities, staffed by qualified personnel with strong market analysis and risk control capabilities [2][3]. Approval Process - The company held a board meeting on August 25, 2025, where the proposal for hedging activities was approved with unanimous support [2][3]. Risk Analysis and Control Measures - The company acknowledges potential risks associated with hedging, including market volatility and operational issues, and has implemented measures to manage these risks effectively [4]. - A dedicated futures business leadership team has been established to oversee the hedging activities and ensure compliance with risk management protocols [4]. Impact on the Company - The hedging activities are intended solely for managing risks related to price fluctuations in the commodity market, without engaging in speculative trading, thus safeguarding the company's core business operations [4][5]. - The company has developed a management system and risk control measures for the hedging business, ensuring that operations are legal, compliant, and in the best interest of all shareholders [5].

Core Viewpoint - LiuZhou Steel Co., Ltd. plans to continue its futures and derivatives hedging business in 2025 to mitigate risks from significant fluctuations in raw material and product prices, aiming for stable operations [1] Trading Overview - Purpose of Trading: To hedge against price volatility risks and achieve stable operations [1] - Trading Products: Includes steel, iron ore, coking coal, coke, silicon manganese, silicon iron, copper, zinc, nickel, and other related products in the steel industry chain [1] - Trading Tools and Venue: Domestic futures as trading tools, with transactions conducted on domestic futures exchanges [1] - Trading Amount: Maximum reusable margin/premium not exceeding 300 million RMB, with the highest contract value not exceeding the corresponding physical goods value and not exceeding 30% of the annual budget for raw material purchases or steel sales [1] - Professional Personnel: The company has established positions related to hedging business, staffed with qualified and professionally trained personnel, with core members having extensive experience in futures and spot markets [1] - Validity Period: Effective from the date of approval by the company's shareholders' meeting until March 2026 [1] - Funding Source: Entirely from self-owned funds [1] Review Procedures - On August 25, 2025, the company held its third meeting of the Audit Committee and the thirteenth meeting of the ninth Board of Directors, both approving the proposal for the company and its subsidiaries to engage in hedging business, which will be submitted for shareholder approval and does not involve related transactions [2] Risk Analysis and Control - Potential Risks: Includes policy risk, market risk, basis risk, funding risk, operational risk, and technical risk [2] - Risk Control Measures: The company has developed a "Hedging Business Management System," established a futures business leadership group, and enhances research and analysis of raw material procurement and product sales prices, monitoring market changes to adjust strategies as needed [2] Business Impact - The hedging business is limited to products related to the steel industry chain, primarily to mitigate adverse effects from commodity market price fluctuations, effectively manage production costs, control operational risks, and ensure operating profits, without engaging in speculative trading, thus not affecting the normal development of the company's main business, with controllable risks aligned with the interests of the company and all shareholders [3] Accounting Treatment - The company will account for the hedging business according to relevant accounting standards and report it correctly in financial statements. The Audit Committee believes that engaging in futures and derivatives trading aligns with development needs, has established relevant systems and risk control measures, and does not harm shareholder interests, thus agreeing to submit the proposal for Board and shareholder approval [4]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The copper market shows signs of upward momentum with a decrease in copper inventory and an increase in production rates, indicating a tightening supply situation [12][13] - The aluminum sector faces slight pressure due to the end of demand from the photovoltaic sector, with expectations of a demand test in June [12][14] - The gold market is experiencing reduced short-term safe-haven appeal due to easing inflation and fluctuating U.S. tariff policies [12][15] - The rare earth sector is expected to see a simultaneous increase in both domestic and international prices due to export controls and supply disruptions [12][36] - The antimony market is projected to recover due to resource scarcity and reduced global supply, despite recent price corrections [12][37] - Molybdenum prices are on the rise, supported by strong demand in the steel industry and low inventory levels [12][38] - Tin prices are experiencing a decline due to supply recovery expectations, but long-term demand remains positive [12][39] - Tungsten prices are increasing due to tightened supply expectations from domestic mining regulations [12][40] Summary by Sections 1. Overview of Bulk and Precious Metals Market - Copper shows a positive turning point with expected supply tightening in June [12] - Aluminum faces demand pressure as the photovoltaic installation rush ends [12] - Precious metals, particularly gold, are expected to see price increases driven by supply constraints and central bank purchases [12] 2. Bulk and Precious Metals Fundamentals Update 2.1 Copper - LME copper price decreased by 1.22% to $9,497.00 per ton, with domestic inventory continuing to decline [13] - The smelting sector shows increased production rates, indicating a robust supply chain [13] 2.2 Aluminum - LME aluminum price decreased by 0.71% to $2,448.50 per ton, with inventory levels dropping [14] - The operational rate of aluminum processing remains stable, providing some support for future demand [14] 2.3 Precious Metals - COMEX gold price decreased by 1.33% to $3,313.10 per ounce, influenced by U.S. inflation trends [15] - SPDR gold holdings increased, indicating ongoing interest despite short-term price fluctuations [15] 3. Overview of Minor Metals and Rare Earths Market - The rare earth sector is experiencing a robust upward trend due to supply constraints and regulatory changes [12][36] - Antimony prices are expected to recover as global supply tightens [12][37] 4. Minor Metals and Rare Earths Fundamentals Update 4.1 Rare Earths - Prices for various rare earth elements are increasing, driven by export controls and supply disruptions [36] 4.2 Antimony - Antimony prices are projected to recover due to resource scarcity and reduced global supply [37] 4.3 Molybdenum - Molybdenum prices are rising, supported by strong demand in the steel industry and low inventory levels [38] 4.4 Tin - Tin prices are declining due to supply recovery expectations, but long-term demand remains positive [39] 4.5 Tungsten - Tungsten prices are increasing due to tightened supply expectations from domestic mining regulations [40]