[Secondary Lead Production Update] A secondary lead smelter in southwest China had average refined lead output in July, with relatively low recycling volume of scrap batteries. In August, there is a possibility of maintenance-related production suspension. If production continues, it will maintain a similar output level. The final production schedule will be adjusted according to the lead price market trend.

SMM July 31: In July 2026, China's metallurgical-grade alumina production edged up 2.18% MoM but fell 2.48% YoY. As of end-July, China's existing capacity stood at around 118.42 million mt/year, and overall operating capacity fell 1.18% MoM, with a YoY decline of 2.48%. The month's operating capacity decline was mainly due to multiple regional factors, with operating rates diverging among enterprises: In south China, after previous boiler failures forced production suspensions, some lines in Guangxi gradually resumed operations in July, with operating capacity recovering to around 3 million mt/year by month-end, providing some support to regional production. However, another alumina refinery in Guangxi proactively cut production due to technical issues, capping the recovery pace in the region. In Guizhou, tighter domestic bauxite ore supply led enterprises to flexibly adjust production plans, coupled with routine maintenance, resulting in a slight production decline; however, one enterprise in the region steadily ramped up production after earlier stoppages, lifting Guizhou's production slightly. In north China, an enterprise in Shanxi failed to resume production this month due to problems at its red mud pond, becoming the main drag on regional output. Meanwhile, many areas in the north faced tighter bauxite ore supply, further curbing operating rates and causing an overall production decline in the region. Looking ahead to August, China's metallurgical-grade alumina production is expected to recover somewhat. On one hand, maintenance and boiler issues in Guangxi are likely to be largely resolved, allowing production to return to normal levels; the red mud pond issue in Shanxi is expected to be dealt with by mid-August, enabling the restart of related capacity; additionally, domestic bauxite ore supply may also improve modestly, providing raw material support for production growth. Although maintenance shutdowns are still expected in some regions, the overall production additions from restarts are anticipated to exceed the losses from maintenance. The operating capacity of metallurgical-grade alumina in China is projected to remain at around 89.2 million mt/year in August. (The above information is based on market data and comprehensive assessments by the SMM research team and is provided for reference only. This article does not constitute direct investment advice. Clients should make prudent decisions and not rely solely on this information in place of independent judgment. Any decisions made by clients are at their own risk and unrelated to SMM.) Source: SMM

Recently, multiple lithium chemical plants in China announced their production suspension and maintenance schedules from August to September. From the perspective of maintenance motivations, they can be categorized into three types: first, equipment technological transformation, with a combined impact on production of around 3,000 mt; second, production constraints caused by external circuit maintenance, with a combined impact on production ranging from 2,000 to 2,500 mt; third, routine maintenance, with a combined impact of around 4,000 mt in August. Some production line maintenance will continue into September, expected to have an impact on September production of around 2,500 mt. Considering the impacts of all types of maintenance, the total affected production in August is around 9,000 to 9,500 mt, while in September it is around 2,500 mt. Overall, the recent concentrated maintenance will cause periodic reductions on the supply side, and SMM will continue to track the pace and progress of subsequent production resumptions.

According to the Investor Relations Activity Record of Tianhe Magnetics (July 23, 2026): 1. What were the main drivers of the company's sales growth in H1 2026? Tianhe Magnetics responded: The company expects its net profit attributable to equity holders of the parent in H1 2026 to be 73 million yuan to 93 million yuan, up 36.56% to 73.98% YoY; and net profit after deducting non-recurring gains and losses attributable to equity holders of the parent to be 68 million yuan to 88 million yuan, up 91.94% to 148.39% YoY. This was mainly driven by overall high raw material price fluctuations in H1, the company's optimized pricing strategies for some existing and new orders, and raised product selling prices; the company proactively seized market opportunities and carried out sales efforts centered on "focusing on emerging markets, deepening customer relationships, and optimizing channel layout," achieving dual-driven growth in international and domestic markets with significant market development results. Overall operating revenue is expected to increase approximately 30% YoY, with domestic business revenue increasing approximately 50% YoY. For details, please refer to the company's disclosed 2026 H1 performance forecast. 2. What was the breakdown of the company's domestic and international business in H1 2026? Tianhe Magnetics responded: In 2025, the company’s international business generated operating revenue of 1,032.05 million yuan, accounting for 44.02%; domestic business generated revenue of 1,312.51 million yuan, accounting for 55.98%. For the H1 2026 breakdown, please refer to the company’s 2026 semi-annual report to be disclosed on August 26, 2026. 3. How is the construction progress of the new project of the subsidiary Tianhe New Materials planned? Tianhe Magnetics responded: Based on confidence in its own development and market prospects, and to meet current business planning and future development needs, the company invested in establishing the wholly-owned subsidiary Tianhe New Materials and is constructing the "Tianhe New Materials Rare Earth Zero-Carbon Industrial Park (High-Performance Rare Earth Permanent Magnets and Components, Equipment Manufacturing and R&D Project)." The project is progressing smoothly, with an initially planned capacity of 20,000 mt. The construction of this capacity will be steadily advanced by the company in line with market orders and company development. 4. How is the company’s expansion in new businesses? Tianhe Magnetics responded: The company is deepening its presence in emerging fields, developing customized magnets and components to precisely meet performance requirements in emerging markets. At the same time, it is accelerating the expansion of a diversified product system, actively promoting the R&D and industrialisation of high value-added products such as injection-molded magnets, bonded magnets, and magnetic assemblies, driving the company’s transformation and upgrade from a "magnetic material product supplier" to an "integrated rare earth permanent magnet solutions provider." In addition, the company's wholly-owned subsidiary Tianzhihe focuses on the R&D, production, manufacturing, and sales of key production equipment for rare earth permanent magnet materials. In 2025, the specialized production equipment developed by Tianzhihe, while meeting the needs of the parent company, successfully achieved commercialized external sales and deliveries. In 2025, cumulative external order signing amounted to 37.3066 million yuan, with external operating revenue reaching 25.4441 million yuan. 5. How does the company respond to fluctuations in raw material prices? Tianhe Magnetics responded: The company's procurement model is centered on "procurement based on production plus safety inventory," achieving precise on-demand procurement and dynamic inventory management through ERP and other information systems. The company has signed long-term agreements with major suppliers, establishing a stable and reliable supply chain system, and employs a scientific reserve mechanism to flexibly adjust inventory levels, effectively smoothing raw material price fluctuations, thereby securing stable supply while controlling procurement costs and risks. 6. What is the impact of export control policies on the company? Answer: The company has always strictly adhered to all national laws, regulations, and regulatory requirements. Upon the release of relevant export control policies, it promptly deployed and proactively responded, comprehensively establishing and continuously improving a full-process compliance management system for export controls. The company strictly follows the compliance management system to carry out export license application work, obtaining export licenses issued by the Ministry of Commerce in an orderly and lawful manner, thereby ensuring the smooth, orderly, sustained, and healthy development of its overseas international business. At the same time, the company continues to advance its market diversification strategy, actively expands into different regional markets, reduces reliance on single markets, and enhances its overall risk resistance capability. Furthermore, the refinement and strict enforcement of relevant export control policies have significantly raised the industry's standardization level. This creates favorable conditions for enterprises that have established sound compliance systems and can continuously meet licensing and delivery requirements, helping to guide industry resources toward well-operated enterprises, supporting them to secure long-term cooperation with high-quality clients, and promoting the entire industry's development toward a more orderly and higher-quality direction. 7. Is there any plan to develop rare earth targets? Tianhe Magnetics responded: The company is a leading domestic provider of high-performance rare earth permanent magnetic materials, primarily engaged in the R&D, production, and sales of high-performance rare earth permanent magnetic materials such as sintered NdFeB and sintered SmCo. It also extends its industry chain to injection molded magnets, bonded magnets, and magnetic assemblies, offering clients comprehensive rare earth permanent magnet solutions. The company currently has no such R&D plan. 8. What is the company's view on future rare earth prices? Tianhe Magnetics responded: Rare earths are important strategic resources of the nation. Rare earth product prices are influenced by factors such as market conditions, policy changes, and industry supply-demand cycles. Fluctuations of rare earth prices within a reasonable range benefit the development of both upstream and downstream sectors of the rare earth industry chain. Tianhe Magnetics disclosed its semi-annual performance forecast on July 9, which showed, based on preliminary estimates by the financial department, that the net profit attributable to owners of the parent company for the first half of 2026 is expected to range from RMB 73 million to RMB 93 million. Compared with the same period last year (statutory disclosed data), this represents an increase of RMB 19.5448 million to RMB 39.5448 million, up 36.56% to 73.98% YoY. It is estimated that in H1 2026, the net profit attributable to shareholders of the parent company, excluding non-recurring gains and losses, will be between 68 million yuan and 88 million yuan, representing an increase of 32.5723 million to 52.5723 million yuan compared with the same period last year (as disclosed in statutory reports), up 91.94% to 148.39% YoY. Regarding the main reasons for the expected increase in H1 performance, Tianhe Magnetics stated: 1. In H1, raw material prices fluctuated at high levels overall. The company optimized its pricing strategy for some existing and new orders and raised product selling prices. 2. In 2026, the company proactively seized market opportunities, centered its sales efforts on "focusing on emerging markets, deepening customer relationships, and optimizing channel layout," achieving dual-wheel drive from both international and domestic markets, with significant results in market development. Overall operating revenue is expected to increase by approximately 30% YoY, of which domestic revenue is expected to grow by about 50% YoY. 3. During the reporting period, the impact of non-recurring gains and losses on net profit is estimated to be approximately 5 million yuan, compared with 18.0275 million yuan (after tax) in the same period last year. In its 2025 annual report, introducing its main business, products, and application fields, Tianhe Magnetics stated: The company is an advanced provider of high-performance rare earth permanent magnetic materials in China. Guided by the corporate vision of "being the innovator in permanent magnet material innovation," it mainly engages in the R&D, production, and sales of high-performance rare earth permanent magnetic materials such as sintered NdFeB and sintered SmCo, and extends its business to injection-molded magnets, bonded magnets, and magnetic assemblies, providing clients with comprehensive rare earth permanent magnet solutions. Focused on independent R&D and technological innovation, and oriented by application scenarios and development needs in cutting-edge fields such as NEVs and automotive parts, wind power, intelligent manufacturing, and 3C consumer electronics, as well as emerging industries such as humanoid robots and low-altitude economy, the company effectively leverages the fundamental and pioneering role of rare earth permanent magnets as key strategic materials, continuously promoting the innovation and application of high-performance, resource-efficient rare earth permanent magnet materials, and facilitating downstream technological upgrades, product replacements, and industrial advances. Regarding its business plan, Tianhe Magnetics introduced in its 2025 annual report: 2026 marks the second year since Tianhe Magnetics' listing and is also the opening year of the 15th Five-Year Plan. Standing at a new starting point, the company adopts "innovation" as its annual development theme, adheres to the philosophy of "breaking conventions and embracing change," and continues to deepen its presence in the high-performance rare earth permanent magnetic materials sector. The company will rely on two major rare earth bases in Baotou, focus on core technology upgrades and the expansion of both domestic and international high-end markets, seize the strategic opportunities of global energy transition and intelligent development, and foster "development" through "innovation."Under the leadership of the Board of Directors, the Company will further integrate resources, leverage its strengths, and systematically advance all work around its operational objectives to ensure high-quality and sustainable development. In 2026, the Company will focus on the following tasks: 1. With "innovation" at the core, continuously strengthen R&D investment to drive product and technology upgrades. 2. Heading toward the new: focus on expanding new products, new clients, and new markets. 3. Continuously strengthen production and quality management to improve yield and workflow efficiency. 4. Deepen the construction of digital smart factories to continuously enhance production efficiency. 5. Steadily advance fundraising and investment projects and new project construction, expanding capacity to underpin performance growth. (1) Continue to advance the construction of fundraising and investment projects. In 2026, the Company will continue to push forward the implementation of these projects as planned. Upon full completion and reaching full production, the Company will achieve an annual capacity of 12,300 mt. Through automated production line upgrades, deployment of digital management systems, and green production process upgrades, the Company will continuously enhance manufacturing efficiency, ensure capacity matching at every stage from blank production to finished product inspection, and lay a solid foundation for performance growth. (2) Advance the construction of the Tianhe New Materials project. The first phase of the "Tianhe New Materials Rare Earth Zero-Carbon Industrial Park (High-Performance Rare Earth Permanent Magnets and Components, Equipment Manufacturing and R&D Project)", invested and constructed by the Company’s subsidiary Tianhe New Materials, has been launched. Upon completion, the project will further expand business scale and enhance the Company’s overall profitability, market competitiveness, and risk resilience. 6. Enhance intelligent equipment manufacturing capabilities and cultivate new growth drivers. 7. Management empowerment: continuously strengthen organization and talent development. 8. Continuously improve ESG efforts to promote sustainable development. 9. Strengthen investor relations and market value management to drive the continuous enhancement of the Company’s value. In its announcement regarding the risk of rare earth raw material price fluctuations, Tianhe Magnetics stated: The main raw materials required for the Company’s production are rare earth metals, which are relatively high-priced. Affected by multiple factors such as macroeconomic conditions, the trade environment, industrial policies, and market supply and demand, their prices fluctuate noticeably. Although rare earth permanent magnet enterprises can dynamically adjust product selling prices based on raw material price changes and other factors, due to the price lock-in of some existing orders and the negotiation period required for new order price adjustments, product price adjustments typically lag behind raw material price fluctuations. If raw material prices experience sustained wild swings in the future and the Company fails to respond in a timely and effective manner, it may adversely affect its operating results. Countermeasures: To address this risk, the Company continuously strengthens supply chain management, enters into long-term agreements with major suppliers to establish stable cooperative relationships, and implements scientific raw material reserve strategies to smooth out the impact of price fluctuations. Looking back at the price performance of Pr-Nd alloy in H1 this year, we can see: at the beginning of the year, Pr-Nd alloy was quoted at 740,000 yuan/mt. Driven by a confluence of supply-demand fundamentals, including tight spot Pr-Nd oxide supply and stockpiling purchases by downstream magnetic material enterprises around the Chinese New Year, prices surged rapidly, hitting a yearly high of 1.09 million yuan/mt at the end of February, representing a cumulative increase of 47.3%. In March, end-use demand contracted materially, coupled with the spread of bearish market news, causing prices to quickly pull back to around 900,000 yuan/mt. In April, supported by higher ore concentrate prices that boosted oxide costs, production suspensions at some separation plants, and the release of export orders during the export control window period, prices recovered and rebounded to 999,000 yuan/mt. From May to June, downstream demand entered the traditional off-season, with magnetic material enterprises reducing inquiries and purchases for Pr-Nd alloy, causing prices to hit bottom again at 830,000 yuan/mt. In mid-to-late June, large-scale production cuts at scrap recycling enterprises due to tax invoice issues led to expectations of tightening supply, driving Pr-Nd prices to bottom out, closing 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%. On July 24, the average price of Pr-Nd alloy was 917,500 yuan/mt, edging up 0.27% from the previous trading day. From the Pr-Nd market perspective, the rise in Pr-Nd oxide futures prices reduced suppliers' willingness to sell spot cargo at low prices, prompting them to raise their Pr-Nd oxide quotes. However, market inquiry activity did not pick up as a result, and actual price gains were relatively limited. Supported by raw material costs, Pr-Nd alloy prices also rose in tandem, and low-priced cargo in the market gradually tightened. Yet, downstream magnetic material enterprises still had limited inquiries, making high-priced alloy transactions difficult, and market trading remained stagnant. Over the short term, affected by the tug-of-war stalemate between upstream and downstream, Pr-Nd product prices are expected to move sideways. Recommended reading:

Recently, heavy rainfall and high-altitude snowfall hit central Chile and the Atacama region, prompting multiple copper mines to initiate winter emergency measures. Los Pelambres, owned by Antofagasta Minerals, temporarily restricted access to the mine site and preemptively scaled back non-critical operations, though no full production suspension has been reported so far. Andina, operated by Codelco, suspended surface operations, while El Teniente halted open-pit ore transport at one point due to hillside snow accumulation. Among these, Caserones was the most significantly affected. Lundin Mining stated that the mine has been suspended since July 18 due to heavy snow, restricted road access, and an on-site power outage. It is currently relying solely on backup generators to sustain critical activities, and production will resume once power is restored and road access improves. As of July 24, the company had not yet issued a production resumption announcement, but Lundin Mining maintained its full-year production guidance. Overall, this round of disruptions was concentrated in central Chile and some high-altitude mining areas. The major copper mines in the far north generally maintained operations, and a nationwide large-scale production halt has not materialized. In the near term, attention should continue to be paid to the timing of Caserones' production resumption and the progress in restoring road access and power at the mine site.

[SMM Daily Brief Commentary on Coking Coal and Coke] Coking coal market: Low-sulphur coking coal in Linfen was quoted at 2,020 yuan/mt. In terms of coking coal, production suspensions and cuts at Shanxi coal mines have been recurring. Output at most mines remains constrained, but some steel mills have initiated the first round of coke price cuts, and market sentiment has pulled back. Failed bids increased in the online auction market for coking coal, and some blending coking coal with relatively high prices proactively adjusted prices downward. In the short term, the coking coal market will remain in the doldrums. Coke market: The nationwide average price of quasi-first-grade metallurgical coke (dry-quenched) was 2,090 yuan/mt. In terms of news, on the 22nd, mainstream steel mills lowered their coke purchase prices, with wet-quenched down 50 yuan/mt and dry-quenched down 55 yuan/mt. In terms of supply, with the first round of price cuts implemented, most coke producers are operating at a loss and show average production enthusiasm. However, downstream wait-and-see sentiment is relatively strong, coke producers’ shipments have slowed, and inventory pressure continues to increase. Demand side, steel mills’ hot metal production fell significantly, and the weak trend in end-use consumption is difficult to reverse. Steel prices have continued to weaken, and steel mills are controlling the pace of coke arrivals, showing a strong willingness to pressure coke prices. Overall, coke producers are facing sluggish shipments, and cost support for coke has weakened. Market sentiment has turned colder, and in the short term the coke market may remain in the doldrums, with coke prices still expected to face further price cuts. [SMM Steel]