中国基础材料监测：2025 年 7 月 -需求走弱，供应面改善尚不明朗-China Basic Materials Monitor_ July 2025_ weakening demand, while supply work has yet to firm up

Summary of China Basic Materials Monitor - July 2025 Industry Overview - The report focuses on the China Basic Materials industry, highlighting the current state of demand and supply dynamics as of July 2025. Key Points Demand Trends - End-user orderbooks showed a mild month-over-month (MoM) increase but remained at low levels, indicating weak overall demand [1] - Infrastructure construction has weakened significantly, with a noticeable deceleration in new project starts due to ongoing funding constraints and stringent payment requirements [1] - Metal demand has softened, with signs of inventory buildup in the supply chain, influenced by seasonal softness and a sequential correction in domestic solar demand [1] - Current Chinese demand is reported to be 7-11% lower year-over-year (YoY) for cement and construction steel, and 1-10% lower for copper, flat steel, and aluminum [1] Supply Dynamics - The determination on supply adjustments remains mixed, with: - Steel production cuts beginning but with heterogeneous targets discussed [1] - Local government commitments on capacity elimination in cement being absent [1] - Marginal coal miners showing reluctance to cut production amid poor pricing [1] - Surprises in the oversupplied lithium market due to mining license approval inspections [1] - Recent weeks have seen improvements in margins/pricing for steel, coal, and lithium, while cement, aluminum, and copper prices have weakened [1] Producer Feedback - A proprietary survey indicated that 31% of respondents in downstream sectors and 30% in basic materials reported a MoM pickup in July, while 25% and 24% indicated a lower MoM trend, respectively [2] Additional Insights - The report emphasizes the importance of funding in infrastructure projects, which is currently constrained, affecting new project initiations [1] - The mixed signals in supply adjustments suggest a complex market environment where producers are navigating between demand pressures and pricing strategies [1] Conclusion - The China Basic Materials industry is experiencing a challenging environment characterized by weakening demand, mixed supply responses, and significant pressures on pricing and margins across various materials. The insights from producer feedback and high-frequency data provide a nuanced understanding of the current market dynamics, indicating potential risks and opportunities for investors in this sector.