On July 21, the stock price of Zhong Ke San Huan rose, and as of the close on the 21st, it was up 4.36% to 12.69 yuan per share. In terms of news, the H1 2026 earnings flash report released by Zhong Ke San Huan on the evening of July 20 showed: In H1, the company achieved operating revenue of 3,613.77 million yuan, up 23.67% YoY; total profit of 102.80 million yuan, up 1.18% YoY; net profit attributable to shareholders of the listed company of 49.22 million yuan, up 11.88% YoY; and after deducting non-recurring gains and losses such as government subsidies, net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses of 32.30 million yuan, up 2.25% YoY. Zhong Ke San Huan's semi-annual earnings flash report showed: In H1 2026, facing increasingly fierce market competition and a complex and volatile external environment, through the joint efforts of all employees, the company's core product sales increased YoY, and through cost reduction measures such as optimizing formula processes and reducing heavy rare earth usage, the overall gross margin improved YoY; some subsidiaries improved their operations, achieving loss reduction or turnaround; meanwhile, the company further improved inventory management, optimized the inventory structure of key raw materials, and asset impairment losses decreased YoY. Due to the appreciation of the RMB against the US dollar and euro, the company incurred exchange losses during the reporting period, and finance costs increased YoY, partially offsetting the profit growth. In a recent survey response, Zhong Ke San Huan stated that over the years, the company has continuously improved and optimized heavy rare earth reduction technologies such as grain refinement, grain boundary diffusion, and grain boundary regulation, and achieved combined application of multiple technologies, continuously reducing the heavy rare earth usage in high-performance magnets, lowering material costs, and striving to enhance the market competitiveness of its products. In a survey response, Zhong Ke San Huan stated that the company has strengthened its management of concentrated raw material procurement and dynamically adjusts inventory based on actual conditions, currently holding 1-2 months' worth of rare earth raw material inventory. According to its previously released 2025 annual report, in 2025, facing a complex and volatile external environment and increasingly fierce industry competition, the company's management and all employees worked together to continuously optimize operations and management, actively take effective measures such as cost reduction and efficiency improvement, and strive to promote stable operations and healthy development, achieving significant YoY growth in operating results. Exchange gains increased by a certain extent YoY, while asset impairment losses decreased significantly YoY. During the reporting period, the company achieved operating profit of 176.57 million yuan, up 372.87% YoY; total profit of 179.89 million yuan, up 379.71% YoY; net profit attributable to shareholders of the listed company of 91.32 million yuan, up 660.50% YoY; and after deducting non-recurring gains and losses such as government subsidies, net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses of 60.61 million yuan, up 451.03% YoY. Regarding the Company's main business and product applications, Zhong Ke San Huan stated in its 2025 annual report: The Company's principal products are sintered NdFeB and bonded NdFeB permanent magnet materials, widely used in new energy vehicles (NEVs), automotive motors, consumer electronics, robots, industrial motors, energy-saving elevators, inverter air conditioners, and wind power generation, among other fields. Against the backdrop of the low-carbon economy sweeping the globe, countries worldwide are focusing on environmental protection and low-carbon emissions as key technology areas. Rare earth permanent magnet materials, represented by sintered NdFeB and bonded NdFeB, play a vital role in establishing a complete low-carbon emission reduction green industry chain. Humanoid robots and the low-altitude economy are two major emerging demand growth poles for high-performance NdFeB. The former boosts explosive growth in high-end magnetic materials through joint servo motors, while the latter, driven by eVTOLs and drones, expands demand for high-power-density magnetic materials. Together, they reshape the demand structure and technological direction of rare earth permanent magnets. Currently, the humanoid robot industry has yet to achieve large-scale mass production. Once commercial deployment is realized, it will have a positive impact on the NdFeB permanent magnet materials industry and the Company. During the reporting period, the Company focused on R&D of high-performance magnets for humanoid robots to capture market opportunities following their future commercial deployment. At the same time, it actively and continuously monitors developments in the low-altitude economy, striving to capture potential market opportunities. Regarding the 2026 business plan, Zhong Ke San Huan stated: In 2026, the Company will closely align with its future development strategy, focus on core objectives, advance the implementation of key tasks, and drive sustained business improvement. (1) Continuously strengthen technology R&D, focusing on key R&D directions, intensifying efforts on core technology breakthroughs, promoting the industrial application of R&D outcomes, and enhancing product technology content and market competitiveness; improve R&D management and incentive mechanisms to stimulate the innovation vitality of R&D teams. (2) Optimize market development strategies, deepen engagement with core clients and key markets, actively expand into emerging application fields, improve sales channels and service systems, and increase the breadth and depth of market coverage; continuously optimize the market structure in and outside China to enhance market resilience against risks. (3) Deepen production and operations management, promote the intelligent and automated upgrading of production sites, optimize production processes and resource allocation to further reduce costs and increase efficiency; strengthen collaborative supply chain management to ensure stable raw material supply and cost control. (4) Advance digital transformation, expand the coverage of information system applications, improve the construction of business-finance integration, enhance data integration and analysis capabilities, and empower operations management and decision-making through digitalization. (5) Strengthen the talent and incentive system, continuously recruit key talent, improve talent development and career advancement pathways, and fully mobilize employee enthusiasm and creativity. (6) Strengthen compliance management, continuously monitor industry policy changes, dynamically optimize the compliance management system, and ensure all business activities strictly comply with laws, regulations and regulatory requirements. When discussing potential raw material supply and price risks, Zhong Ke San Huan stated in its 2025 annual report: Rare earth raw materials are the core input for the company’s product production, and their supply is significantly affected by policies such as industry rectification and production controls, which may pose tight supply risks. At the same time, rare earth raw material prices are influenced by multiple factors including the international economic situation, policy adjustments, and market supply and demand, and price fluctuations may cause fluctuations in the company’s production costs, thereby impacting operating performance. A review of the price performance of Pr-Nd alloy, an important raw material for NdFeB, in H1 this year shows: At the beginning of the year, Pr-Nd alloy was quoted at 740,000 yuan/mt. Driven by spot tightness of Pr-Nd oxide, downstream magnetic material enterprises’ stockpiling purchases around Chinese New Year, and other supply-demand fundamental factors, it surged rapidly to hit a high of 1.09 million yuan/mt by end-February, with cumulative gains of 47.3%. In March, a substantial contraction in end-use demand coupled with spreading bearish market news pulled the price back quickly to around 900,000 yuan/mt. In April, supported by rising concentrate prices boosting oxide costs, production halts at some separation plants, and the release of export orders during the export control window, the price recovered and rebounded to 999,000 yuan/mt. From May to June, downstream industries entered the traditional off-season, and magnetic material enterprises reduced their inquiries and purchases of Pr-Nd alloy, leading to a second bottoming at 830,000 yuan/mt. In mid-to-late June, large-scale production cuts at scrap recycling enterprises due to tax invoice issues tightened supply expectations, driving Pr-Nd prices to bottom out and close at 905,000 yuan/mt on June 30. The average price in H1 was about 905,000 yuan/mt, with a fluctuation range of 48.3%. According to SMM’s latest quotation, on July 21, the price of Pr-Nd alloy was 915,000-925,000 yuan/mt, with an average price of 920,000 yuan/mt, down 0.54% from the previous trading day. Currently, the overall rare earth market is showing a weak price trend. Focusing on the Pr-Nd market, futures prices of Pr-Nd oxide have pulled back, while market inquiry prices are low. Affected by these two factors, suppliers of Pr-Nd oxide have slightly lowered their quotes. However, factory quotes remain relatively firm, and low-priced cargoes are still hard to find in the market. In the metal market, prices have also declined in tandem, but market inquiries have not improved as a result. Downstream magnetic material enterprises are cautious in procurement, mainly purchasing through restocking to meet rigid demand. Intense bargaining between upstream and downstream players has led to a stalemate in actual transactions. In the short term, affected by the stalemate in market trading, Pr-Nd product prices are expected to move sideways. Recommended reading:

SMM, July 21: US Secretary of State Rubio stated in a media interview on the evening of the 19th that the Trump administration “remains open to a diplomatic solution.” Expectations of a negotiated settlement between the two sides in the market tug-of-war heated up, and international oil prices pulled back in tandem. Earlier inflation concerns driven by energy prices cooled, and the market’s bets on the US Fed holding high interest rates weakened marginally. Coupled with a sharp rebound in Asia-Pacific stock markets today, overall market risk appetite improved. The built-up sentiment for an oversold rebound in precious metals was released in a concentrated manner, and multiple positive factors resonated to drive a rebound in both precious metals futures and equity prices. Zhaojin Gold, Shandong Humon Smelting, Western Gold, and other precious metals enterprises reported positive H1 earnings forecasts, and the favour from some market funds also contributed to the synchronized strength in precious metals futures and stocks. As of around 13:35 on July 21, COMEX gold was up 1.07% at $4,058.7/oz; SHFE gold main contract rose 1.31% to 885.6 yuan/g; COMEX silver gained 2.13% to $58.285/oz; SHFE silver main contract advanced 3.65% to 14,186 yuan/kg; silver T+D increased 2.84% to 14,113 yuan/kg. Additionally, platinum main contract rose 1.63% to 399.3 yuan/g, and palladium main contract gained 2.87% to 302.4 yuan/g. Precious metals stocks surged. As of the close on July 21, the precious metals sector rose 7.34%. Among individual stocks: Xingye Silver&Tin, Chifeng Gold, and Shengda Resources hit the daily limit up; Xiaocheng Technology, Shanjin International, Hunan Silver, Zhongjin Gold, and Shandong Gold were among the top gainers. News [Russia’s gold holdings fell to 73.4 million ounces in June] The Russian central bank stated on its website that as of month-end June, the value of its reserves was $299 billion, compared with $325.9 billion at the end of May. [World Gold Council: Chinese market gold ETFs saw significant inflows in H1] According to the World Gold Council, gold prices weakened in June, erasing earlier gains, and H1 ended with a decline. Despite outflows in June, Chinese market gold ETFs still recorded significant inflows in H1, driving total assets under management slightly up to 243 billion yuan, with total holdings increasing by 29 mt to 277 mt. [Zhaojin Gold: expects H1 2026 net profit to increase 347.48%-436.98% YoY] Zhaojin Gold disclosed its earnings forecast on the evening of July 14. It expects H1 2026 net profit attributable to parent at 200 million to 240 million yuan, up 347.48%-436.98% YoY; and non-recurring net profit of 80 million to 116 million yuan, up 490.44%-756.14% YoY. [Shandong Humon Smelting: Estimated H1 2026 Net Profit Up 81.06%-122.36% YoY] Shandong Humon Smelting disclosed its earnings forecast on the evening of July 14, estimating H1 2026 net profit attributable to shareholders at 570 million – 700 million yuan, up 81.06%–122.36% YoY; adjusted net profit is estimated at 272 million – 402 million yuan, down 2.03%–33.73% YoY. [Western Gold: Estimated H1 2026 Net Profit Up 280.16%-333.39% YoY] Western Gold disclosed its earnings forecast on the evening of July 13, estimating H1 2026 net profit attributable to shareholders at 500 million – 570 million yuan, up 280.16%–333.39% YoY; adjusted net profit is estimated at 490 million – 580 million yuan, up 172.96%–223.09% YoY. [Zhongjin Gold: Estimated H1 2026 Net Profit of 4.1 Billion – 4.6 Billion Yuan, Up 52.15%-70.7% YoY] Zhongjin Gold disclosed its earnings forecast on the evening of July 13, estimating H1 2026 net profit attributable to shareholders at 4.1 billion – 4.6 billion yuan, up 52.15%–70.7% YoY; adjusted net profit is estimated at 4.05 billion – 4.55 billion yuan, up 36.96%–53.87% YoY. Spot Market Silver On July 21, the SMM 1# silver ex-factory reference average price in the morning was 13,825 yuan/kg, with the average up 0.7% from the previous trading day. In the spot market, premium/discount quotes that day extended the trend of previous days, with consumption remaining sluggish and transactions being mostly at parity to slight discounts. The spot-futures price spread on the futures market widened slightly, and some suppliers reduced shipments. Early morning quotes in the Shanghai area were mainly concentrated at TD parity to +5 yuan/kg, with some rigid demand orders supporting transactions and suppliers’ willingness to sell weakening. In the Shenzhen area, some national-standard cargoes were concentrated around TD -5 yuan/kg to parity, with low-priced cargoes existing but having limited disruption. That day, the market’s premium/discount against the SHFE2608 contract was at a discount of 20 – 30 yuan/kg; against the most-traded SHFE contract 2610, it was at a discount of 40 – 60 yuan/kg. Overall, precious metals lacked clear guidance from news, and recently both domestic and overseas futures markets have shown signs of bulls entering, so attention can be paid to changes in open interest. Spot premiums/discounts traded near parity, and the pattern of weak supply and demand persisted. Platinum On July 21, spot platinum was quoted at 395 – 398 yuan/g, with the average price at 396.5 yuan/g, unchanged from the previous trading day. Spot market, mainstream quotations for platinum were at parity to a premium of 1 yuan/g against the PT2608 contract. The premiums/discounts of mainstream quotations were basically flat from the previous trading day. Today, the price spread between the GFEX platinum October and August futures contracts widened slightly. In the morning, suppliers' quotes for spot platinum were mainly at premiums of 0.5 to 1 yuan/g against the most-traded GFEX contract. Later, as the futures market rose, some suppliers adjusted their quotes to around parity, where transactions were made. Downstream users made small purchases based on orders. Overall, the spot platinum market saw normal trading volumes today. In July, a Section 232 window for platinum and palladium will open. If the US imposes tariffs on platinum and palladium after the 180-day negotiation period ends, it will support prices in the short term. Voices from Various Sides Regarding the future trend of precious metals, some institutions' views are as follows: Jinyuan Futures research report stated: The recent escalating US-Iran tensions have pushed oil prices higher, lifting inflation expectations. Precious metals remained under pressure but their decline slowed. After the sharp pullback in gold and silver prices, bargain-hunting buying emerged. The correction in US tech stocks will also redirect some funds into precious metals. Although the correction trend in gold and silver is not yet over, the probability of a rebound is increasing. Hundun Futures research report noted: As geopolitical tensions continue to seesaw, the market is not yet convinced enough to expect an overall pullback in oil prices. Inflation expectations could rebound from lows, limiting the decline in US bond yields. Hence, the rebound in precious metals remains limited under these circumstances. The US Fed's relatively cautious remarks have also capped the rebound in precious metals. Fed Chairman Warsh said the balance sheet should be kept as small as possible so that it can expand in a crisis. The labour market looks quite good, but he is not optimistic about inflation and is dissatisfied with it; Fed's Williams stated that with inflation still elevated, it must be brought back sustainably to the 2% target, and the current monetary policy stance is very well positioned to achieve that; Logan said that a modest rate hike now would help better balance the outlook and risks, and moderate tightening now is better than having to tighten significantly later. The Fed's stance is clearly cautious, unwilling to let the market overprice a relaxation of vigilance. The market dares not further trade interest rate cut expectations, and precious metals weakened again. Liquidity and risk appetite remain weak under the influence of the equity market. As AI fundamentals are being reassessed, deleveraging in funding further amplifies volatility. The continued decline in the equity market has made liquidity relatively tight and restricted the drivers for precious metals. At this stage, the overall market is still dominated by sentiment-driven trading. Geopolitics, the AI narrative, and economic/inflation resilience mean the US dollar index and US bond yields will remain volatile. A trend reversal in precious metals still needs to be observed. Analysts at ANZ Research said in a report that physical gold demand and central bank purchases are supporting the gold market. These analysts added that while gold faces short-term headwinds from the US Fed’s tightening expectations and a strong US dollar, investment positions in gold look thin after months of exchange-traded fund outflows, suggesting that the scope for further declines may be limited. A high interest rate environment typically weighs on non-yielding assets such as gold. (Zhitong Finance) Goldman Sachs said that despite pressure from the US Fed’s tightening-leaning expectations, central bank buying is expected to provide a floor for gold. Demand remains robust, with central banks purchasing 81 mt in May and a three-month average of 67 mt per month, well above the pre-2022 average of 17 mt, according to the firm’s estimates. Goldman Sachs analysts stated, “We believe the trend of central banks increasing gold holdings will persist for years as they diversify reserves to hedge geopolitical and financial risks.” The bank expects average monthly purchases of 50 mt and 40 mt for this year and next year, respectively. (Jinshi Data APP) Soojin Kim, analyst at MUFG, said, “Recent price action suggests that the market is placing greater weight on the possibility of US interest rates staying high for longer rather than on gold’s traditional safe-haven demand. This leaves gold vulnerable to pressure unless geopolitical risks further translate into a broad deterioration in financial market sentiment.” (Jinshi Data APP) Asset manager Fidelity International said it plans to rebuild its gold position, which it reduced earlier this year, at an appropriate time in the future, believing that gold’s long-term momentum remains strong. Ian Samson, multi-asset portfolio manager at Fidelity International, recently said, “We plan to add back to gold, the question is just timing.” He said he reduced the gold allocation to a neutral level during the January-February period, when the multi-year bull run in gold abruptly ended. Samson expects the gold market to re-enter a bull market sometime in 2027. The logic of a return to a bull market would only be disrupted in a scenario where “governments re-embrace fiscal discipline and central banks truly commit to bringing inflation back down,” he added, “but I don’t think we are in that world right now.” Samson also said that continued gold purchases by central banks—a key driver of the previous bull market—will continue to support gold prices. Last Thursday, US Eastern Time, technical strategists at Bank of America warned that the pullback in gold so far this year may still have significant room to run, and its trajectory could resemble the devastating bear markets that followed the sharp rallies in gold in 1980 and 2011. They proposed a phased buying strategy, suggesting full allocation only when gold prices fall to the $3,450–$3,250 range. Bank of America analysts pointed out in a technical research report that gold prices have now accumulated a series of bearish signals, with the risk of a sustained drop increasing: a death cross pattern, elevated net long positions, a bearish topping candlestick, a TD Sequential exhaustion signal, and an RSI reading of 90 at the recent high—a level consistent with the gold price peaks in 1980 and 2011. UBP lowered its year-end gold price target to $4,800 per ounce and, while remaining long-term bullish on gold, is not adding to positions for now. Its current gold allocation is neutral at around 5%, down from an overweight position earlier this year. Paras Gupta, head of discretionary portfolio management for Asia at UBP, said in an interview that the previous overweight position "posed the greatest risk to our portfolios." UBP would like to see the Middle East ceasefire agreement hold and more clarity on inflation and interest rate trends before adding to its positions. Gupta said that for investors currently without gold holdings, a drop below $4,000 per ounce would be an extremely attractive entry point. (Zhitong Finance) Recommended reading:

Spanish banking group CaixaBank has provided EUR 30.3 million in green project finance to renewable energy developer IGNIS for a 50MW solar plant in Palencia, Spain. Separately, ENGIE and IGNIS signed a 10-year flexibility purchase agreement covering 625MWh of BESS projects in Spain, expected to come online in 2028. IGNIS has also agreed to provide 82MW of grid access and connection capacity for Apto’s new data center campus in Fuenlabrada, linked to a long-term PPA from a 94MW solar project under development.

[SMM Analysis: New Battery Consumption Tax Policy Takes Effect: Sodium-Ion Batteries Exempt, Lithium Batteries Taxed, Sodium-Ion Batteries Enter a "Tax Exemption Dividend Period"] SMM, July 21: The Ministry of Finance, the General Administration of Customs, and the State Taxation Administration recently jointly issued an announcement on the adjustment of the battery consumption tax policy. For the first time, lithium-ion batteries and similar products are included in the scope of consumption tax collection, while sodium-ion batteries, solid-state batteries, fuel cells, and others are listed in the exemption catalog. This "tax-and-exempt" design has garnered widespread attention across the sodium-ion battery industry chain...

On July 16, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration jointly issued Announcement No. 20 of 2026, introducing systemic adjustments to the consumption tax policy on certain batteries. This marks the most significant policy revision since the establishment of the battery consumption tax framework in 2015, covering key categories such as lithium-ion batteries, solar cells, sodium-ion batteries, and solid-state batteries. Through a combined mechanism of “tiered tax rates + targeted exemptions + standards-based access,” it addresses the dual objectives of tax regulation and industrial guidance. 1. Lithium-Ion Batteries to Be Taxed First: 2% from September, Rising to 4% in September Next Year According to the announcement, starting September 1, 2026, conventional battery categories such as lithium-ion batteries will be subject to a 2% consumption tax rate, which will be raised to 4% from September 1, 2027. Lithium-ion batteries are the category most broadly affected by the new rules, with power batteries accounting for the vast majority of their shipments. Assuming an average battery cell price of 0.5 yuan/Wh and annual shipments of 1,000 GWh, a 2% tax rate translates to an additional annual tax burden of approximately 10 billion yuan at the cell level. At present, gross margins of power battery cell enterprises are generally compressed to around 10% or even lower, making this cost increase significant. In terms of pass-through, top-tier players, leveraging economies of scale and stronger bargaining power, are expected to pass on part of the tax burden to downstream automakers. However, second- and third-tier enterprises have limited room to negotiate, so their profit margins may come under further pressure, potentially intensifying industry divergence. After the tax rate rises to 4% in 2027, cost pressure will be significantly magnified, likely accelerating the rationalization of inefficient capacity. 2. Targeted Tax Exemptions for Frontier Technologies: Sodium-Ion and Solid-State Batteries Enjoy a “Policy Window” The announcement specifies that from September 1, 2026 to December 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, as well as perovskite, tandem, and gallium arsenide solar cells in the PV sector will be exempt from consumption tax. This arrangement directly targets frontier technology pathways that have not yet been industrialized on a large scale but hold strategic significance: Sodium-ion batteries are at a critical stage of transitioning from demonstration applications to large-scale mass production. The exemption will effectively lower the initial comprehensive production costs, narrow the cost gap with lithium-ion batteries, and accelerate their penetration in applications such as low-speed vehicles. Solid-state batteries, as the core direction for next-generation power batteries, remain in the R&D and small-batch trial production stage transitioning from semi-solid to all-solid-state. The tax exemption helps reduce trial-and-error costs and accelerate industrialization. The core logic is: tax mature technologies, and exempt frontier technologies from tax. Exempting frontier technologies that are still in the early stages of industrialization reflects a policy orientation of “using tax supplements from mature technologies to support frontier technologies, enabling them to move forward with less burden,” thereby guiding capital and resources toward technological iteration. In the short term, at the initial stage of the lithium battery consumption tax, cost side, battery cell enterprises will be under pressure and will manage by raising prices or optimizing their product mix. This cost increase is particularly erosive to the profits of second- and third-tier enterprises, and some marginal capacity may face break-even pressure. In terms of production scheduling pace, ahead of the September 1 start date, battery cell manufacturers may exhibit an “installation rush” effect involving concentrated shipments and advance stockpiling, potentially driving August production figures sharply higher in the short term, while September production schedules will face a phased pullback. In terms of price pass-through, top-tier players still have some cushion for negotiation, but smaller cell makers will face greater resistance in passing the tax burden to automakers and will need to absorb most of the costs themselves. In terms of product mix, production scheduling priorities for low-margin categories may be passively downgraded, accelerating the industry reshuffle. In the long term, after the tax rate rises to 4%, industry-wide cost pressure will be significantly magnified. Combined with the scheduled expiration of the tax exemption window for frontier technologies at the end of 2028, whether sodium-ion and solid-state batteries can achieve cost reductions at scale by then will become a critical factor in determining their competitiveness. The policy sends a very clear signal: the state’s regulatory logic for the battery industry is shifting from “universal support” to “differentiated guidance,” with technology leaders reaping greater policy dividends.

[7.21 Morning Briefing] US media reports: US-Iran conflict intensifies, the Pentagon is accelerating the deployment of F-16 and F-35 fighter jets to the Middle East. Advisor to Iran’s Supreme Leader: If US forces continue operations, Iran may shift to a full-scale offensive. The most-traded SHFE nickel 2609 contract surged in early trading then pulled back slightly, and as of the morning close, it reported 130,720 yuan/mt, down 0.13%. As the US-Iran conflict escalates, shipping restrictions in the Strait of Hormuz have strengthened sulfur cost support. However, refined nickel inventories remain difficult to reduce. Both domestic and international inventories are still at high levels, and the destocking speed is slow. In the short term, the price of the most-traded SHFE nickel contract is expected to trade within the range of 125,000-130,000 yuan/mt.