CHINA BASIC MATERIALS MONITOR November 2025: more signs of weaker demand Summary: End-user orderbooks remained lack luster on the ground, notably sequential deterioration in whitegoods, renewables and construction, beyond seasonality. Infrastructure further weakened with project start rates at multi-year low level, mostly due to challenged fundings from local government. The decelerating momentum from the trade-in program, high commodity prices, may also contribute to weaker demand in others. Auto remained ...

Accessible version Basic Materials - China Copper & Gold Rebound; Aluminum Margins Improve; Lithium Strong Industry Overview Metals: Aluminum Margins Improve; Gold Rebounds This week, market attention centered on the end of the U.S. government shutdown, which eased risk-off sentiment and supported copper prices. LME copper rose 1.5% WoW to US$10,856/t, while China price gained 1.3% WoW to RMB87,200/t. LME aluminum slipped 0.2% WoW to US$2,830/t, whereas China aluminum price increased 1.7% WoW to RMB21,910/t ...

23 November 2025 | 11:24PM HKT Economics Research CHINA DATA INSIGHTS Our Revamped Investment Tracker Shows Recent Plunge in Fixed Asset Investment Overstated The China Economics Team Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Chelsea Song +852-2978-0106 | chelsea.song@gs.com Goldman Sachs (Asia) L.L.C. Lisheng Wang +852-3966- ...

Core Insights - The Monarch Cement Company (MCEM) has experienced a decline in stock performance, with shares down 3.2% since the third-quarter 2025 results, underperforming the S&P 500's 1.9% decrease during the same period [1] - Year-over-year revenue and earnings have contracted due to weaker demand in Ready-Mixed Concrete operations, with third-quarter net sales falling to $73 million from $80 million [2] - Net income decreased to $25.1 million from $26.4 million, and earnings per share (EPS) fell to $6.44 from $7.21, attributed to lower gross margins and operating income [3] Segment Performance - The Cement business saw a sales increase of $2.8 million, supported by a 1.7% volume growth and favorable pricing, while the Ready-Mixed Concrete business experienced a $9.8 million sales decline due to a 36.6% drop in cubic yards sold [4] - Gross margin pressures persisted, with the consolidated third-quarter gross profit rate slipping to 38.5% from 40.6%, and cement margins narrowing significantly to 49.4% from 57.4% [5] Liquidity and Cash Flow - The company maintains a solid liquidity position, with working capital at $148.9 million as of September 30, 2025, up from $141.2 million at year-end 2024 [6] - Operating cash flow for the nine months declined to $39.5 million from $46.6 million, while capital expenditures reached $25.6 million through September 30, with plans for $40.1 million in full-year capital spending [7] External Factors - Weather-related impacts have constrained construction activity and demand for cement and ready-mix concrete, particularly due to high rainfall during the 2025 construction season [8] - The transfer of certain ready-mix entities to RMCMO Holdings, LLC in December 2024 has affected revenue comparability, with Monarch now reporting its 49% share of RMCMO's earnings separately as equity income [9] Investment Performance - Unrealized gains on equity investments rose to $9.9 million in the third quarter, up from $5.3 million a year earlier, helping to mitigate weaker operating performance [10] - Management reaffirmed its 2025 capital expenditure plan and indicated stable long-term commitments regarding pension and postretirement spending [11] Strategic Developments - The joint venture transaction with RMCMO Holdings, LLC, completed in late 2024, remains the most recent major strategic development, with no significant updates reported [12]

Core Points - Amrize has launched a 'Made in America' label for its cement range, emphasizing American manufacturing and quality [1] - The label guarantees that all aspects of the cement, from raw materials to processing and manufacturing, are conducted in the United States [1] - This initiative supports American jobs and local communities while adhering to rigorous U.S. performance standards [1] Company Summary - Amrize's 'Made in America' label will be implemented across its U.S. cement operations [1]

Core Viewpoint - Adani Enterprises Ltd is positioned to become the highest bidder for Jaiprakash Associates Ltd (JAL) in the ongoing insolvency process, offering a more favorable payment structure compared to Vedanta Group's bid [1][4]. Bid Evaluation - In early September, Vedanta Group initially emerged as the highest bidder with an offer of Rs 12,505 crore in net present value (NPV) [2]. - The committee of creditors (CoC) evaluated the bids and scored Adani Enterprises Ltd's resolution plan as the highest, followed by Dalmia Cement (Bharat) and Vedanta Ltd [4]. - The CoC is expected to vote on the resolution plan in the next two weeks [4]. Payment Structures - Adani Group proposes to make payments to lenders within two years, while Vedanta's offer includes back-ended payments over five years [5]. - Dalmia Cement's payment plans are contingent upon a Supreme Court judgment regarding a pending matter with the development authority YEIDA [5]. Promoters' Involvement - The former promoters of JAL submitted a last-minute offer to settle with lenders but did not provide a clear source of funds, which is typically seen as an attempt to disrupt the resolution process [6]. Company Background - JAL has diverse business interests, including real estate, cement manufacturing, hospitality, and engineering & construction, and was admitted into the Corporate Insolvency Resolution Process (CIRP) on June 3, 2024 [7]. - The company faced insolvency after defaulting on loan payments, with financial creditors claiming around Rs 60,000 crore [8]. Business Operations - JAL's major projects include Jaypee Greens in Greater Noida and Jaypee International Sports City near the upcoming Jewar International Airport [11]. - The company operates four cement plants in Madhya Pradesh and Uttar Pradesh, although these plants are currently non-operational [12]. - Financial stress has impacted JAL's various business operations, including significant engineering, procurement, and construction (EPC) projects [13].

Core Viewpoint - Pacasmayo (CPAC) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which are a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors often rely on earnings estimates to determine a company's fair value, leading to significant stock price movements based on their buying or selling activities [3]. Business Improvement Indicators - The upgrade in Pacasmayo's rating suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [4]. - Over the past three months, the Zacks Consensus Estimate for Pacasmayo has increased by 14.5%, indicating a positive trend in earnings estimates [7]. Zacks Rank System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [6]. - The system maintains a balanced distribution of "buy" and "sell" ratings, ensuring that only the top 20% of stocks receive a "Strong Buy" or "Buy" rating, highlighting their superior earnings estimate revisions [8][9].

Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA reached $36 million, reflecting a 23.7% year-over-year reduction, with the adjusted EBITDA margin contracting to 20.8%, a decline of 315 basis points year-over-year [5][12][16] - Net loss attributable to the owner of the company totaled ARS 8.5 billion for the quarter, compared to a net gain of ARS 27.9 billion in the same quarter last year [15][16] - Net debt declined by $9 million quarter-over-quarter to $206 million, with a net debt-to-EBITDA ratio of 1.49 times, up from 0.89 times at the end of 2024 [5][16][18] Business Line Data and Key Metrics Changes - Revenue in the cement segment declined 13.2% year-over-year, driven by a 5.4% contraction in volumes and softer pricing [8][12] - Concrete revenues remained broadly flat versus the third quarter of 2024, with a 37.8% increase in volumes offset by softer pricing dynamics [9][12] - The aggregates segment posted a slight 0.8% revenue decline, despite a 26.3% increase in sales volumes driven by higher activity in road construction [9][10] Market Data and Key Metrics Changes - Cement dispatches fell around 1% in the quarter, largely explained by a soft July, although September volumes were the highest in 22 months [6][7] - VAC cement dispatches reached 44% of total industry dispatches, showing strong performance in line with the previous quarter [7] - October's volumes showed renewed strength, with a 7.4% year-over-year increase, indicating a potential recovery in the market [7][26] Company Strategy and Development Direction - The company aims to optimize performance and support the country's development as conditions normalize, with a focus on unlocking investment projects that have been on hold [19][20] - The recent electoral outcome is expected to provide stability needed for investment projects, with management expressing optimism about higher activity levels [19][26] Management Comments on Operating Environment and Future Outlook - Management noted that key industry activity lost momentum due to a slowing economy and uncertainty around the electoral process, but expressed optimism for recovery following the elections [4][19] - The company expects to see a recovery in pricing in dollar terms with a more stable exchange rate and plans to increase prices above inflation [24][25] Other Important Information - The company began dispatching new 25-kilogram bags during the quarter, which were well received by customers [19] - Cash flow generation from operating activities totaled ARS 32 billion, reflecting higher working capital requirements and lower operational results [16][17] Q&A Session Summary Question: Pricing outlook for the company - Management indicated that pricing dynamics are expected to improve, with plans to increase prices above inflation in the coming months, especially with a more stable exchange rate [22][24] Question: Capital allocation and dividend distribution - Management stated that due to the macroeconomic situation in Argentina, they have not advanced with dividend payments this year but plan to reassess the situation for 2026 [24][25] Question: Early call orders or volumes for the fourth quarter - Management noted a recovery in volumes for October, driven by pre-election investment hesitance and a favorable exchange rate, expressing optimism for continued volume growth [26][27]

Core Insights - Loma Negra reported a net loss of Ps. 8.6 billion in 3Q25, a significant decline from a net profit of Ps. 27.9 billion in the same period last year, primarily due to lower operational performance and a decrease in financial results [35][36] - The company experienced a 12.1% year-over-year decline in net revenue, totaling Ps. 209.3 billion, largely attributed to a 13.2% decrease in the Cement segment [17][8] - Adjusted EBITDA decreased by 23.7% year-over-year to Ps. 43.5 billion, with a margin contraction of 315 basis points to 20.8% [27][28] Financial Performance - Net revenue for 3Q25 was Ps. 209,272 million, down from Ps. 238,067 million in 3Q24, reflecting a decline in the Cement segment [17][8] - Gross profit fell by 32.5% to Ps. 36,261 million, with a gross profit margin of 17.3%, down from 22.6% in the previous year [24][6] - The company reported a net loss attributable to owners of Ps. 8.5 billion, with a loss per share of Ps. 14.5122 compared to a gain of Ps. 47.2609 in 3Q24 [36][9] Operational Highlights - Cement, masonry, and lime sales volumes decreased by 5.4% year-over-year to 1.37 million tons, despite a sequential increase of 12.8% [11][12] - The concrete segment saw a volume increase of 37.8% year-over-year, driven by private developments and public infrastructure projects [13] - The aggregates segment also experienced a 26.3% year-over-year volume increase, supported by road construction and railroad projects [20] Debt and Capitalization - Total debt as of September 30, 2025, was Ps. 396.7 billion, with a net debt to LTM adjusted EBITDA ratio of 1.49x, up from 0.89x at the end of 2024 [37][38] - The company issued a Class 5 corporate bond for US$113 million in July 2025, aimed at refinancing upcoming maturities [39][38] - Cash and cash equivalents increased to Ps. 115.2 billion compared to Ps. 18.1 billion in the previous year [37] Cash Flow Analysis - Net cash generated from operating activities was Ps. 31.9 billion, down from Ps. 83.8 billion in 3Q24, reflecting higher working capital needs [40][41] - Cash used in investing activities totaled Ps. 61.9 billion, primarily due to short-term allocations from the bond issuance [42] - Financing activities generated Ps. 74.3 billion, mainly from the bond issuance, net of repayments [42]

Financial Data and Key Metrics Changes - CSN achieved a 26% growth in EBITDA, reaching BRL 3.3 billion, with an EBITDA margin of 27%, marking a quarter-on-quarter gain of 330 basis points [5] - The company's leverage ratio decreased to 3.1 times from 3.5 times at the end of the previous year, indicating improved financial discipline [5][14] - Adjusted cash flow was negative at BRL 815 million, an improvement from the previous quarter's negative BRL 1.4 billion, reflecting the impact of high interest rates and working capital consumption [13] Business Line Data and Key Metrics Changes - In mining, CSN shipped over 12 million tons for the first time, with a 5% increase in sales volume compared to the previous quarter, and a 57% growth in EBITDA to over BRL 1.9 billion [6][20] - The cement segment recorded the second-largest sales volume in CSN's history, with over 3.6 million tons sold, achieving an EBITDA of BRL 388 million and a margin of 29% [10][23] - The logistics segment reached a record EBITDA of BRL 550 million with a margin above 35%, driven by increased cargo handling efficiency [10][24] Market Data and Key Metrics Changes - The steel market remains pressured by imported materials, with CSN being the only company to show growth in freights and EBITDA despite adverse conditions [7] - The cement market showed resilience with increased consumption, particularly benefiting from the Minha Casa Minha Vida program and high employment levels in the real estate sector [9][21] - The company noted a recovery in iron ore prices, which positively impacted profitability, with prices above $100 per ton [20] Company Strategy and Development Direction - CSN is focused on operational efficiency and cost control, with a strategy to maximize production while maintaining competitive pricing [27][28] - The company is pursuing strategic projects, including the CSN Infrastructure Project, which aims to enhance liquidity and reduce leverage [34][37] - Management emphasized the need for protective measures against imported goods to support local production and competitiveness [29][41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the steel industry's recovery, citing improved price dynamics and anti-dumping measures [9][41] - The company anticipates continued operational improvements across all segments, with a focus on maintaining strong EBITDA margins [34][46] - There is an expectation for the fourth quarter to show improved performance, with a target of returning to double-digit EBITDA margins [43][54] Other Important Information - CSN reported a 13% increase in working capital compared to the previous quarter, reflecting improved commercial accuracy [13] - The company achieved the lowest steel production costs in four years, indicating enhanced operational efficiency [8][19] - CSN's ESG initiatives have been recognized, with significant advancements in safety, environmental sustainability, and diversity [26] Q&A Session Summary Question: Discussion on leverage and divestment strategy - Management confirmed a deleveraging process, reducing leverage from 3.5 to 3.1 times, and highlighted the importance of strategic projects like CSN Infrastructure for future liquidity [33][34] Question: Insights on commercial strategy and fourth-quarter outlook - Management acknowledged the challenges posed by high competition and import penetration but emphasized a focus on value over volume, with expectations for improved margins in the fourth quarter [38][39] Question: Addressing cash burn and financial initiatives - Management reported a reduction in cash burn from BRL 4 billion to BRL 800 million, attributing this to better operational results and cost controls [44][45] Question: Updates on anti-dumping measures and market conditions - Management expressed optimism regarding upcoming anti-dumping measures, particularly for galvanized products, and noted a robust demand in the domestic market despite high import levels [50][52]