Summary of Key Points from the Conference Call Industry Overview - **Industry**: Greater China Materials - **Date**: July 25, 2025 - **Analysts**: Morgan Stanley Asia Limited Key Takeaways Production and Sales of Industrial Goods - Average crude steel output from key steel mills was 2.141 million tons in mid-July 2025, reflecting a 2.1% increase compared to early July [1] - Planned production of household air conditioners is expected to decline by 7.1% year-over-year in August [1] - Passenger vehicle (PV) sales are projected at 1.85 million units in July, marking an 8% year-over-year increase but an 11% month-over-month decrease, with new energy vehicle (NEV) sales at 1.01 million units [1] - Shipbuilding delivery volume for the first half of 2025 was 24.13 million compensated gross tons (CGT), down 3.5% year-over-year [1] Infrastructure and Property Developments - Construction has commenced on a massive hydro station at the Yarlung Tsangpo River in Tibet, with a total investment of RMB 1.2 trillion [2] - Water conservancy investment in China reached RMB 532.9 billion in the first half of 2025, a decrease of 6.3% year-over-year [2] - Renovation of old urban communities saw 16,500 new starts, achieving approximately 66% of the annual target in the first half of 2025 [2] Supply Policies - The National Development and Reform Commission (NDRC) and the State Administration for Market Regulation (SAMR) are working to improve standards for recognizing low-price dumping and regulating market price order [3] - The National Energy Administration (NEA) has issued a notice to check coal overproduction in eight major coal-producing provinces for 2024 and year-to-date 2025 [3] Building Materials Activity - Weekly cement shipments in July 2025 were 665 million tons, with a year-to-date total of 2,778 million tons, reflecting a 56% increase [4] - Daily molten iron production was reported at 2,422 thousand tons, showing a slight decrease of 0.1% [4] - Planned production of battery materials in July 2025 includes 145.1 GWh of batteries, a 1% increase year-over-year, while lithium production is expected to reach 102.2 thousand tons of lithium carbonate equivalent (LCE), a 3% increase [4] Additional Insights - The hydro station project is significant for future energy supply and infrastructure development in the region, indicating a strong government push towards renewable energy sources [8] - Supply-side policies may lead to increased market stability and reduced competition pressures in the materials sector [3] - The decline in household AC production and fluctuations in vehicle sales may indicate broader economic trends affecting consumer demand [1][2] Conclusion The conference call highlighted a mixed outlook for the Greater China materials sector, with positive developments in infrastructure and energy projects, but challenges in consumer goods production and sales. The ongoing supply-side policies are expected to play a crucial role in shaping market dynamics in the coming months.

Industry Trend - China made further headway in June in its bid to tackle oversupply of key industrial commodities [1] - Crude steel production leading declines in construction materials [1]

Investment Rating - The industry investment rating is classified as Attractive [6]. Core Insights - More steel mills have received production control notices, indicating tighter supply conditions in the steel market [9]. - Cement and long steel products consumption were affected by holidays and rainy weather, leading to fluctuations in demand [9]. - Planned production in the lithium battery supply chain has seen a mild increase in May, reflecting ongoing investment in this sector [9]. - Total investment in projects that started construction in April was approximately Rmb 3.2 trillion, representing a decrease of 8% month-over-month and 20% year-over-year, while the year-to-date figure is up 16% year-over-year [9]. Summary by Sections Production and Sales - Jiangsu and Shaanxi provinces have been ordered to reduce their annual crude steel production by 6 million tons and 1 million tons, respectively [2]. - Daily output of crude steel from key enterprises was reported at 2.202 million tons at the end of April, showing a decrease of 1.2% compared to mid-April but a slight increase of 0.1% year-over-year [2]. Market Activity - PV retail sales reached 1.755 million units in April, marking a year-over-year increase of 14.5% but a month-over-month decline of 9.4% [3]. - NEV sales totaled 905,000 units in April, reflecting a year-over-year increase of 33.9% but a month-over-month decrease of 8.7% [3]. - Excavator sales in April were estimated at around 22,000 units, up 17% year-over-year [3]. Building Materials - Weekly cement shipments in May were reported at 175.3 billion Rmb, with North China showing a 51% share, down 3.3 percentage points year-over-year [4]. - The investment in new projects started in April was Rmb 3.2 trillion, down 8% month-over-month and 20% year-over-year [4]. Consumption Trends - Weekly steel apparent consumption was reported at 21.8 million tons year-to-date, with long products down 23% and flat products down 6% compared to the previous year [4]. - Glass inventory increased by 3% month-over-month and 6% year-over-year, indicating stable demand in the glass sector [4].