SMM August 8: Base metals market: Overnight, base metals on both domestic and overseas markets generally fell, with only LME aluminum, LME lead, LME nickel, and SHFE nickel rising. LME nickel led the gains with a 1.5% increase, SHFE nickel rose 0.52%, LME aluminum rose 0.09%, and LME lead rose 0.03%. LME zinc led the declines with a 1.9% drop, LME tin fell 1.67%, SHFE zinc fell 1.54%, and SHFE tin fell 1.51%. The rest of the metals fell within 1%. Alumina main contract rose 0.04%, while cast aluminum main contract fell 0.09%. Overnight, ferrous metals showed mixed performance. Stainless steel rose 0.21%, rebar closed flat at 3,010 yuan/mt, and iron ore fell 0.56%. In the coking coal and coke sector, coking coal rose 1.71% and coke rose 1.15%. Overnight, precious metals: COMEX gold rose 2.37% overnight, reclaiming $4,400/oz, with a weekly surge of 7.17%. COMEX silver rose 3.56% overnight, with a weekly surge of 10.41%. Domestically, SHFE gold rose 1.53% and SHFE silver rose 1.66%. SHFE gold jumped 5.03% weekly, and SHFE silver surged 9.43% weekly. UBS Chief Investment Officer Ulrike Hoffmann-Burchardi and her team said, "This gold rally is supported by fundamentals. We expect gold prices to approach $5,000/oz in H1 2027." Since the US and Israel launched a war against Iran at the end of February, gold prices came under pressure and pulled back. UBS strategists noted that risks remain in the near term. If oil prices rise, or if the market prices in expectations of a more hawkish Fed monetary policy and rising bond appeal, gold could face pressure. However, the institution maintains an optimistic outlook on gold's medium- to long-term trend. Hoffmann-Burchardi said the team expects inflation to gradually ease, and the Fed is likely to keep rates unchanged this year and restart an interest rate cutting cycle in 2027. "The growing expectation of lower policy rates is likely to depress real yields and drag on the US dollar, thereby boosting investment demand for gold and creating a more favorable market environment for the metal," she said. (Wallstreetcn) As of 7:40 on August 8, overnight closing prices: Macro Front Domestic: [Exceeding 30 Trillion Yuan! China’s Goods Trade Import and Export Continued Growth Momentum in First 7 Months] China's General Administration of Customs today released statistics showing that in the first seven months of this year, China's total goods trade import and export value reached 30.13 trillion yuan, up 17.3% YoY, continuing a solid growth trend. Exports amounted to 17.44 trillion yuan, up 14%, while imports stood at 12.69 trillion yuan, up 22%. In July, imports and exports totaled 4.66 trillion yuan, up 19.2% YoY. Exports reached 2.71 trillion yuan, up 17.8%, while imports were 1.95 trillion yuan, up 21.2%. SMM, based on data released by the General Administration of Customs, has compiled the import and export situation of some products in the metals industry, as follows: [Aluminum industry profits in H1 up about 115% YoY; exports of aluminum semis and aluminum products up about 14% YoY] In H1 2026, aluminum industry profits rose about 115% YoY. This came as aluminum prices increased, while raw material prices such as alumina pulled back. Some enterprises further adopted green power like hydropower and expanded the use of new energy, making production greener and securing more cost advantages. Not only were domestic clients rushing to place orders, but overseas clients were also increasing their orders. In H1 this year, China exported a total of 5.62 million mt of aluminum semis and aluminum products, an increase of about 14% compared with the same period last year. With more orders and busier production lines, environmental protection facilities also operated at full capacity. (CCTV Finance) [Beijing: moderately raising the maximum loan amount for housing provident fund; a married couple may borrow up to 3.4 million yuan for their first home purchase] On the evening of the 7th, the Beijing Municipal Commission of Housing and Urban-Rural Development, the Beijing Municipal Commission of Planning and Natural Resources, and the Beijing Housing Provident Fund Management Center jointly issued the "Notice on Further Optimizing and Adjusting the City's Real Estate Policies." It mentioned moderately raising the maximum loan amount for housing provident fund. For a home-buying family with one provident fund contributor, the maximum loan amount for a first home purchase is 1.2 million yuan, and for a second home, it is 1 million yuan; if both spouses are contributors, the maximum loan for a first home is 2.4 million yuan, and for a second home, it is 2 million yuan. The maximum loan amount can be further increased under the following conditions: 1. For a household with household registration in the six central urban districts that purchases a first home outside those six districts, the maximum can be increased by 200,000 yuan; 2. For a home purchase that complies with the city's green building development support policies, the maximum can be increased by 400,000 yuan; 3. For families with two or more children of Beijing household registration, the loan amount can be increased by 400,000 yuan. If multiple conditions are met simultaneously, the increases can be stacked. For a family with one provident fund contributor, the maximum increase is 600,000 yuan; for a family where both spouses are contributors, the maximum increase is 1 million yuan. The actual loan amount will be determined based on the family's repayment ability. (Jinshi Data APP) In terms of the US dollar: As of the overnight close, the US dollar index fell 0.35% to 99.6, declining 0.18% for the week and logging a second straight weekly loss. US nonfarm payrolls unexpectedly fell by 23,000 in July, far below market expectations of an increase of 80,000, while the May and June figures were revised down by a combined 103,000. The labour force participation rate dropped to the lowest in more than five years. The disappointing employment data sent the probability of a September rate hike plunging from 55% to 44%, the 10-year US Treasury yield diving from 4.68% to 4.65%, and the US dollar index breaking below 99.5 during the session. ‘New Fed Wire’ Nick Timiraos: The July employment report will be a difficult one for the Fed to interpret. There is no new evidence of a re-acceleration in the labour market, which may somewhat weaken the case for a rate hike next month, but this still depends on whether inflation data can improve further. Officials held rates steady last week, but three of the twelve officials voted to raise rates. The decline in the unemployment rate will keep the focus on inflation data. (Wallstreetcn) The latest survey results from the New York Fed show that Americans’ overall expectations for the labour market improved in July, and their inflation expectations also changed. Consumers’ one-year-ahead inflation expectations edged down to 3.6% from 3.7%. Three-year-ahead and five-year-ahead inflation expectations were unchanged at 3.3% and 3%, respectively. The perceived probability of finding a new job among unemployed workers rose to 46.2%, the highest this year. This increase was most pronounced among those with a high school diploma or less and households with an annual income below $50,000. Consumers grew more optimistic about the stock market, with the probability that stock prices will be higher a year from now reaching the highest level since this data series began in April 2021. (Wallstreetcn) According to CME’s ‘FedWatch’ tool: The probability that the Fed will keep rates unchanged in September is 59.9%, while the probability of a cumulative 25bp rate hike is 40.1%. For October, the probability of keeping rates unchanged is 45.3%, with a 44.9% probability of a cumulative 25bp hike and a 9.8% probability of a cumulative 50bp hike. (Jin10 Data APP) On the macro front: Next week, China will release data including the July M2 money supply year-on-year rate; the US will release data including the July NFIB Small Business Optimism Index, the ADP employment change for the week ending July 25, the July existing home sales annualized total, the July unadjusted CPI year-on-year rate, the July seasonally adjusted CPI month-on-month rate, the July seasonally adjusted core CPI month-on-month rate, the July unadjusted core CPI year-on-year rate, the awarded yield on the 10-year Treasury auction for the week ending August 12, the bid-to-cover ratio on the 10-year Treasury auction for the week ending August 12, the initial jobless claims for the week ending August 8, the July PPI year-on-year rate, the July PPI month-on-month rate, the July retail sales month-on-month rate, the August preliminary one-year inflation expectations, the June business inventories month-on-month rate, and the August preliminary University of Michigan consumer sentiment index; the Eurozone will release data including the August Sentix investor confidence index, the June industrial production month-on-month rate, the Q2 GDP year-on-year revised reading, the Q2 seasonally adjusted employment change final quarter-on-quarter rate, and the June seasonally adjusted trade balance; the UK will release data including the Q2 GDP year-on-year preliminary reading, the June three-month GDP month-on-month rate, the June manufacturing production month-on-month rate, the June seasonally adjusted goods trade balance, and the June industrial production month-on-month rate; data including the France final July CPI month-on-month rate, the Canada June wholesale sales month-on-month rate, the Japan June trade balance, the Australia Reserve Bank of Australia interest rate decision for the week of August 11, and the Germany final July CPI month-on-month rate will all be released. Additionally, the National Energy Administration releases nationwide electricity consumption data around the 15th of each month. The Bank of Japan released the summary of opinions from its July monetary policy meeting. The Reserve Bank of Australia announced its interest rate decision and monetary policy statement. RBA Governor Bullock held a monetary policy press conference. 2026 FOMC voting member and Cleveland Fed President Hammack delivered remarks. 2027 FOMC voting member and Richmond Fed President Barkin spoke on the economic outlook. RBA Governor Bullock attended a hearing. Crude oil: Oil prices fell in overnight trading, with WTI crude down 0.27% and Brent crude down 0.13%. On a weekly basis, WTI crude fell 8.96% and Brent crude fell 6.31%. The market remained focused on negotiations between the US and Iran regarding the Strait of Hormuz. Expectations of US-Iran peace talks suppressed geopolitical risk premiums. Goldman Sachs’ energy research team estimated Brent’s fair value at $80/bbl and maintained its view of a consolidation range of $80–90/bbl. On August 7, US officials stated that Oman and Iran had made progress on the Strait of Hormuz issue, and an agreement is expected to be reached soon. Once an agreement to restore unimpeded commercial shipping is announced, the US will lift its blockade of Iranian ports. US actions will continue to be performance-based and linked to Iran’s fulfillment of its commitments. There was no immediate response from Iran or Oman to the above. (CCTV) It was reported on August 7 that Hassan Qashqavi, spokesperson for Iran’s Parliamentary National Security and Foreign Policy Committee, stated that Iran and Oman had finalized the general framework of a memorandum of understanding on shipping in the Strait of Hormuz, with the final text and specific details to be publicly released shortly. On August 6, Iran publicly disclosed preliminary textual details of its proposed strategic management plan for the Strait of Hormuz, which includes provisions barring hostile parties from transiting the strait, with violators subject to fines of up to 20% of cargo value. Iran has repeatedly emphasized in recent days that arrangements related to the Strait of Hormuz should be decided solely through consultations between Iran and Oman, and that no external interference will be accepted. Meanwhile, US President Trump stated on the 6th that the US is participating in negotiations concerning the Strait of Hormuz. (CCTV) Next week, the EIA will release its Short-Term Energy Outlook, the IEA will publish its monthly Oil Market Report, and OPEC will issue its monthly Oil Market Report (specific release dates for the monthly reports are to be determined, generally published around 18:00–21:00 Beijing time). A new round of price adjustments for domestic refined oil products in China will open.

【Galvanized Steel Market】According to SMM, persistent hot and rainy weather continued to weigh on outdoor construction activities across China, resulting in weak domestic galvanized steel orders throughout July. Meanwhile, anti-dumping measures and ongoing geopolitical tensions between the US and Iran continued to affect export orders, keeping domestic galvanized steel operating rates at relatively low levels during the month.

On August 7, data from the General Administration of Customs showed that China exported 10.211 million mt of steel products in July 2026, down 199,000 mt MoM, or 1.9% MoM; cumulative exports from January to July reached 64.995 million mt, down 4.4% YoY. In July 2026, China imported 445,000 mt of steel products, up 4,000 mt MoM, or 0.8% MoM; cumulative imports from January to July were 3.14 million mt, down 10.1% YoY. Table 1: Steel Imports and Exports Data Summary, January-July Source: SMM • China's steel exports stayed elevated with fluctuations in July According to SMM's July export schedule survey, the planned HRC export volume for the month was 1.059 million mt, slightly higher than actual exports in June. SMM export order data showed that export orders for steel products declined from a high level in May. At that time, port inspections on MD and other activities were relatively strict, which slowed down the pace of some export orders. However, orders at steel mills improved slightly. Coupled with the fact that cargoes delayed due to earlier inspections were gradually shipped out in July, overall steel exports in July still delivered a relatively decent performance. Table 2: China's Total Steel Exports Source: SMM • July steel imports remained low On the import side, steel imports in July were 445,000 mt, up 4,000 mt MoM, or 0.8% MoM; cumulative imports from January to July were 3.14 million mt, down 10.1% YoY. Net exports of steel reached 61.855 million mt. Short-term Steel Export Outlook 1. Global manufacturing slid further MoM; overseas demand remained in off-season mode According to J.P. Morgan's global PMI data, the Global Manufacturing PMI for July 2026 came in at 52.1. Although it remained in expansion territory, the pace of expansion slowed for the third consecutive month. The preemptive steel stockpiling demand earlier triggered by geopolitical disruptions in Middle Eastern shipping has been fully cleared. Combined with persistently weak demand for consumer goods, property, and infrastructure among end-users in Europe and the US, global commodity and physical steel orders collectively fell into contraction territory. Alongside this, ASEAN manufacturing PMI also declined again. China's Manufacturing New Export Orders Index for July was 49.6%, down 0.5 percentage points MoM, slipping back into contraction territory. 2. Overseas steel mills have proactively controlled production; supply contraction lacks sustainability In June 2026, global crude steel production fell 0.3% YoY to 157.9 million mt. In China, as the southern rainy season and high-temperature off-season deepened, downstream steel product construction was significantly hampered. Under heavy pressure from persistently inverted profit margins, steel mills' monthly output edged down 0.8% MoM. Excluding China, production in the rest of the world declined 2.0% MoM, with performance diverging in Asia's core regions. India and Vietnam both saw flat MoM output in June; the former was supported by robust domestic infrastructure resilience, while the latter benefited from earlier concentrated stockpiling and steady operation following new capacity ramp-up. In contrast, Japan and South Korea were dragged by slowing production schedules in downstream automotive and manufacturing sectors, showing a seasonal slight correction. Notably, the Middle East and CIS regions, which had plunged deeply in May, saw marginal recovery. Meanwhile, Europe and the US collectively entered a seasonal weakening trajectory. EU production in June dropped significantly by 5.3% MoM, with Germany tumbling 9.4%; North America declined 5.9% MoM and the US also fell 4.0%. The main reasons for the pullback in Europe and the US were, on one hand, the industry's entry into the routine summer maintenance period, and on the other, the high summer electricity prices and steel scrap prices squeezing electric furnace margins, significantly dampening mills' willingness to operate. The decline in overseas production theoretically offers structural opportunities for China's exports. However, the drops in end markets like Europe and the US were more due to proactive production cuts driven by falling demand. Coupled with India and Vietnam still maintaining high output, China's exports continue to face pressure. Figure 1: Global Crude Steel Production by Region Source: SMM 3. Price advantage continued to narrow; export order-taking pressure persisted As of July 31, 2026, the HRC export offers (FOB) for India, Turkey, and the CIS stood at $515/mt, $575/mt, and $515/mt, respectively, while China's HRC export offer (FOB) was $486/mt. China's HRC offers were -$29/mt, -$89/mt, and -$29/mt lower than those other countries, respectively. China's steel export price advantage further narrowed MoM from June. Overseas markets remained in the off-season, and low-price promotions remained the main channel for those countries to ease domestic pressures. In contrast, domestic sales pressure was not evident, and prices remained relatively firm. The price spread between Chinese and overseas markets continued to narrow, and pressure on export order-taking persisted. Figure 2: HRC Offers in Major Global Markets Source: SMM 4. Export orders rebounded from a bottom in June-July; order-taking improved slightly According to SMM's latest steel mill export order schedule, the planned HRC export volume this month was 1.023 million mt, down 2.8% MoM from the actual level last month. SMM steel export order data showed that although overseas markets remained in the off-season, recent restrictions on resource exports from the Middle East (especially Iran) created a notable supply gap in semi-finished products in overseas markets, particularly in Southeast Asia. This shortfall was quickly filled by Chinese resources. On the other hand, traders took profits from spot-futures price spread operations in late July, offering lower actual prices to facilitate transactions, which led to a bottoming rebound in export order data in July. In reality, overseas demand had not yet emerged from the off-season, and a steady recovery in export order-taking still faces pressure. Figure 3: SMM Steel Export Order Volume Source: SMM 5. Anti-dumping cases related to steel increased in July In July, the number of new anti-dumping cases related to steel initiated against China increased, covering products such as steel pipes, coated steel, sections, coiled rebar, wire rod, and hot-rolled coils. Details of specific cases and affected volumes are shown in the table below: Table 3: New Anti-Dumping Cases in July Source: SMM Taking all factors into account, lower actual transaction prices stimulated some volume growth, with semi-finished products accounting for a larger share. Given that July export numbers have already been significantly elevated, SMM expects that total steel exports in August will not sustain a strong unilateral upward trend. Instead, they will move sideways in a high range, while semi-finished product exports will remain relatively high. Figure 4: Steel Exports and Forecast, 2024-2026 Source: SMM Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute decision-making advice. Note: This article is an original work of this official account. For requests related to reprinting, whitelisting, cooperation, etc., please contact us. Without permission, no part may be reproduced, modified, used, sold, transferred, displayed, translated, compiled, disseminated, or otherwise disclosed to any third party, nor may any third party be authorized to use it. Otherwise, once discovered, SMM will pursue legal action for infringement, including but not limited to holding the infringing party liable for breach of contract, restitution of unjust enrichment, and compensation for direct and indirect economic losses. 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Next week, the key macroeconomic data will include the US July unadjusted CPI YoY rate, July retail sales MoM rate, and preliminary August one-year inflation expectations. On the geopolitical front, tensions in the Middle East have eased. According to US media, Iran and Oman have reached a temporary agreement on the Strait of Hormuz issue; meanwhile, US President Trump again stated that military operations against Iran may end soon. In addition, the US will release several economic indicators next week, and markets will continue to monitor statements from Fed officials on future monetary policy. In the short term, the macro front remains highly uncertain, providing limited support for base metal prices. On the LME lead front, suppliers in markets outside China have been actively picking up goods recently, with LME lead inventory dropping by over 16,000 mt this week. However, considering the current overseas lead consumption situation, the supply shortage is mainly concentrated in 4N lead, while 3N lead trading remains sluggish. The market widely views this destocking as a result of inventory transfers rather than improvement in end-use consumption. Meanwhile, LME lead Cash-3M contango widened further to -$47.56/mt, also reflecting that expectations for spot consumption improvement remain limited. Attention should still be paid to developments in the Middle East and the Fed's monetary policy impact on the base metal market. Next week, LME lead is expected to continue its range-bound consolidation, trading at $1,870-1,915/mt. For SHFE lead, the accumulation of lead ingot social inventory is a normal phenomenon ahead of SHFE lead delivery. As delivery approaches next week, suppliers are expected to further increase shipments to delivery warehouses, and visible inventory may continue to rise, exerting some pressure on lead prices in the short term. However, on the supply side, maintenance shutdowns at major primary lead delivery brand smelters are gradually starting, which could become an important factor supporting lead prices in mid-to-late August. The most-traded SHFE lead contract is expected to dip first and then stabilize and rebound, with a trading range of 15,450-15,900 yuan/mt. Spot lead price forecast: 15,400-15,650 yuan/mt. In the short term, downstream lead-acid battery enterprises are seeing both production recovery and output cuts, and consumption improvement remains limited, providing insufficient support for lead prices. On the supply side, maintenance shutdowns at primary lead smelters are increasing, and market availability of goods is expected to tighten gradually, with primary lead spot cargo likely to maintain a slight premium. If lead prices gradually recover, secondary lead enterprises' losses are expected to be repaired, and smelters' willingness to sell may pick up accordingly, with secondary refined lead trading at a discount likely to increase.

This week, nickel prices experienced wild swings dominated by Indonesia's RKAB supplementary quota policy. At the start of the week, nickel prices were in the doldrums, pressured by progress in US-Iran negotiations and growing expectations for the reopening of the Strait of Hormuz. Mid-week, news that a major mine had been approved for additional RKAB quotas ignited the market, sharply intensifying expectations of ample supply and sending SHFE nickel down to 127,460 yuan/mt. On Friday, Indonesia's Minister of Energy and Mineral Resources stated that "the quota additions circulating in the market have not been approved," prompting a rebound in futures from the deep losses, with SHFE nickel recovering to 129,000-130,000 yuan/mt. In the spot market, the average price of SMM #1 refined nickel was 131,360 yuan/mt this week, down 2,700 yuan/mt WoW. Jinchuan nickel cathode premiums remained stable this week at 1,100-1,200 yuan/mt. Mainstream electrodeposited nickel discounts were in the range of -200 to -400 yuan/mt, with electrodeposited nickel discounts narrowing. Spot market transactions recovered this week compared to last week, but overall purchasing sentiment remained subdued. The July US Fed meeting kept rates unchanged as expected, but its overall stance leaned hawkish, putting broad pressure on commodity valuations, with the base metals sector weakening collectively. A US Fed governor stated that if inflation fails to pull back, further policy tightening may be inevitable. The US-Iran situation showed a pattern of "détente first, then relapse." Early in the week, US-Iran negotiations continued to send signals of easing, and expectations for the Strait of Hormuz reopening rose. Trump said he was negotiating with Iran, with talks divided into two phases: the strait's opening and denuclearization. However, the situation later took a new turn—Iran's passage regulations for the Strait of Hormuz banned vessels from the US, Israel, and other hostile nations. A provisional strait transit agreement drafted by Iran and Oman also faced dual obstacles from US sanctions and insurance issues, leaving the strait's full reopening mired in resistance. Domestically, China’s July manufacturing PMI data indicated weak economic recovery momentum. On the inventory side, the Shanghai Bonded Zone inventory stood at approximately 1,400 mt this week, down 300 mt WoW. China's social inventory was around 133,000 mt, with a WoW buildup of approximately 2,000 mt. Nickel prices are currently in a state of high uncertainty, where policy expectations are swinging wildly, macro headwinds and geopolitical risks intertwine. They are expected to maintain wild swings in the short term, with the most-traded SHFE nickel contract trading range at 125,000-133,000 yuan/mt.

The price inversion pressure on cobalt salt was high, and this week nickel intermediate product payables were in the doldrums.

Iran said it is close to reaching an agreement with Oman on arrangements to reopen the Strait of Hormuz, with a potential framework under which Iran would manage vessels entering the Persian Gulf while Oman would oversee outbound traffic. However, Iranian sources said key details remain unresolved and Tehran is also seeking the lifting of US restrictions on Iranian ports. At the same time, Iran warned that any renewed US attacks on its infrastructure could trigger retaliation against oil fields, refineries and other energy facilities in Gulf states, while Houthi forces continue to target Saudi oil tankers, leaving regional shipping risks elevated.

After hitting the daily limit on August 5, Baowu Magnesium’s share price pulled back over the past two trading days. As of around 10:55 a.m. on August 7, the stock was up 2.74%, trading at 11.26 yuan per share. On the news front, Baowu Magnesium’s investor relations activity record dated August 4, 2026 shows: Question: What are Baowu Magnesium’s main businesses? Baowu Magnesium responded: The company’s businesses include magnesium materials, magnesium products, aluminum products, mineral products, and building formwork. Its main products include magnesium alloys, magnesium alloy deep-processed products, aluminum alloys, aluminum alloy deep-processed products, master alloys, and strontium metal. Question: Could you introduce the company’s ore resources? Baowu Magnesium responded: The company’s subsidiary Chaohu Baomei holds 90 million mt of dolomite ore reserves and is in active mining operation; subsidiary Wutai Baomei holds 580 million mt of dolomite ore reserves; and associate company Anhui Baomei holds 1.3 billion mt of dolomite ore reserves. The subsidiary Gansu Mining under Gansu Baomei holds 14.91 million mt of available quartzite ore reserves. Question: How was China’s magnesium product production in H1 2026? Baowu Magnesium responded: In H1 2026, China’s primary magnesium production was approximately 603,100 mt, up 26.49% YoY. China exported approximately 239,100 mt of various magnesium products, up 7.95% YoY. Question: How does the company promote magnesium metal? Baowu Magnesium responded: Relying on its full magnesium industry chain, the company focuses on lightweighting and high-end manufacturing, seizes the rapid growth opportunity of magnesium applications in lightweighting, and will focus on the following points: 1. Full-chain guarantee: With an integrated industry chain covering ore mining, magnesium smelting, alloys, and deep processing, we ensure a stable magnesium supply to support large-scale applications across sectors. 2. Technology leadership: Leveraging our technological strengths, we collaborate with universities, research institutes, and clients on R&D for new magnesium alloys, and break through key technologies such as large-scale integrated die casting and magnesium alloy corrosion resistance and flame retardancy. 3. Application expansion: Guided by high-end, green and intelligent development, we focus on automotive, robotics, aerospace and other fields, and provide integrated services covering materials, components, and solutions. Question: What is the pace of design wins and mass production of magnesium alloy die castings in the NEV sector? Baowu Magnesium responded: The company has concentrated superior technical resources to continue deepening its presence in mid-to-large magnesium casting businesses such as drive motors, instrument panel cross car beams, seat frames, and integrated auto body structural components. In the cross car beam area, we focused on breaking through with leading automakers, securing design wins for multiple hot-model cross car beams, and during this period launched the world’s first “semi-solid process CCB.” In drive motors, we are orderly advancing customer mass production deliveries, actively conducting aluminum-to-magnesium feasibility studies with industry-leading suppliers, and have achieved major breakthroughs in both rare earth alloy R&D and process optimization. Meanwhile, "magnesium alloy auto body integrated castings" became a hot topic in magnesium applications most concerned by NEV manufacturers in 2025. After successfully passing the whole-vehicle road test for a certain automaker's tailgate inner panel, one-stage sample trial production of magnesium components was subsequently completed, contributing substantial verification and testing data for industry technology iteration and further boosting NEV manufacturers' confidence in large magnesium part applications. Under this favorable situation, the company gradually established in-depth R&D cooperation with some leading automakers. In terms of performance: Baowu Magnesium's semi-annual performance forecast showed it expected a net loss of RMB14-20 million in H1. Regarding the reasons for the performance change, Baowu Magnesium stated: Due to a slight YoY increase in magnesium prices, the profitability of the company's magnesium materials segment was basically stable YoY. The main reasons for the YoY decline in the company's H1 performance include: due to aluminum price fluctuations and lower sales volume of aluminum products compared to the same period last year, the aluminum products business saw a decline in profitability; the newly built ferrosilicon project of subsidiary Gansu Baowu Magnesium was just commissioned in May, with consumption indicators not yet stable, leading to relatively high product costs; the company's associate company Anhui Baowu Magnesium was still in the capacity ramp-up stage, with crude magnesium and alloy production significantly higher YoY, and various production technical indicators gradually optimized, but the products remained loss-making, impacting the company's investment income YoY; and due to the appreciation of the renminbi against the US dollar and euro, the company's foreign exchange losses on export business increased YoY, etc. On July 14, Baowu Magnesium issued an announcement on daily related-party transactions. Due to daily production and operation needs, the company and its controlled subsidiaries plan to conduct daily related-party transactions in 2026 with related parties including the controlling shareholder Baosteel Metal and its affiliates, other Baowu second-level subsidiaries and their affiliates, and the associate company Yi'an Yunhai. The types of related-party transactions include purchasing products and goods from related parties, accepting operational services from related parties, selling products and goods to related parties, providing operational services to related parties, providing and financial services (including deposits and loans, factoring, discounting, foreign exchange settlement and sales, etc.). The total estimated amount of daily related-party transactions (excluding financial services) in 2026 is RMB1.28 billion; in addition, the estimated amount of financial related-party transactions with Baowu Group Finance Co., Ltd. has not been adjusted, and the relevant quotas are already included in the overall arrangement. These related-party transactions strictly follow market-based fair pricing principles, with fair and reasonable transaction terms, which are conducive to ensuring the company's sustained and stable operations, will not harm the lawful rights and interests of the publicly listed company and minority shareholders, nor affect the company's operational independence. When asked "Hello, board secretary, could you tell me whether your company can stably mass-produce semiconductor-grade ultra-high-purity magnesium metal ingots as found online, and is the only publicly listed company? Also, what is the proportion of your sales in this area to the company's total sales over the past few years?" Baowu Magnesium responded on the investor interaction platform on June 23: The company's business includes magnesium materials, magnesium products, aluminum products, mineral products, and building formwork. The company's main products include magnesium alloys, magnesium alloy deep-processed products, aluminum alloys, aluminum alloy deep-processed products, master alloys, and strontium metal. Please refer to the 2025 annual report for the proportion of revenue by product segment. Regarding the specific products and sales proportion you mentioned, the company has not publicly disclosed such information; please refer to the company's official periodic reports or announcements. In response to the questions: "1. Regarding the Anhui Qingyang project, what is the mine commissioning progress, and what is the current approximate ore output of the mine? 2. What are the advantages of the company's vertical retort magnesium smelting technology? How does it compare with peers in Fugu?" Baowu Magnesium replied on the investor interaction platform on June 17: The company adopts the vertical retort magnesium smelting process, which has outstanding technical advantages: increased per-retort capacity, shortened production cycle, improved production efficiency, extended service life of reduction retorts, and a higher level of mechanized and automated operations. The Anhui Qingyang mine project has achieved a capacity of 20 million mt per year. Regarding the main business engaged in during the reporting period, Baowu Magnesium introduced in its 2025 annual report: The company is the leader in magnesium-based new materials under China Baowu, possessing the advantages of the entire industry chain and mine resources, leading vertical retort magnesium smelting technology, and its magnesium alloy capacity and market share rank among the top globally. The company focuses on lightweight materials, with products covering automobiles, household consumer electronics, e-bikes, building formwork, and other fields. After more than 30 years of development, the company has become a high-tech enterprise integrating mining, non-ferrous metal smelting and processing, committed to becoming a global leader in the magnesium industry. The company's business includes magnesium materials, magnesium products, aluminum products, mineral products, and building formwork. Its main products include magnesium alloys, magnesium alloy deep-processed products, aluminum alloys, aluminum alloy deep-processed products, master alloys, and strontium metal. For the company's future development outlook, Baowu Magnesium stated in its 2025 annual report: 2026 marks the starting year of the company's 15th Five-Year Plan, and the industry will usher in an important period of opportunity for high-end and large-scale development. The company's board of directors will lead the management to, with "building a lightweight solution provider and becoming a mainstay of China Baowu's new materials" as the core positioning, focus on the main business, deepen and refine operations, promote the upgrading of the entire industry chain, technological innovation, market expansion, and green development, achieving sustained improvement in operating performance and significant enhancement of core competitiveness. 1. Strengthen strategic guidance, consolidate the foundation for magnesium industry new quality productive forces. Accelerate the construction of a development pattern for the entire industry chain covering primary magnesium—alloys—deep processing—end-use applications, focus on tackling key technologies in green smelting and stable production with cost reduction, and accelerate large-scale promotion of key products. 2. Coordinate key project construction, synergistically enhance overall operational efficiency. Accelerate the construction and comprehensive acceptance of the Huayuan Wu's Mine in the Qingyang project, orderly promote the construction of the main plant area and optimization of production indicators, and orderly advance key projects of Gansu Baowu Magnesium, Wutai Baowu Magnesium, and Chaohu Baowu Magnesium. 3. Deepen magnesium industry reform and innovation, promote the modernization of corporate governance systems. Steadily promote business development transformation and innovation, advance asset integration, and further optimize governance and control as well as business management models. 4. Accelerate the layout of smart development, comprehensively advance the construction of information systems. Complete full coverage of the Baowu standard financial system and the update and launch of the cost systems of subsidiaries, build a full-process informatization model project for magnesium business, and further enhance Baowu Magnesium's capabilities in operation management, cost-based management, compliance operation, and risk prevention and control. 5. Focus on reducing primary magnesium costs, continuously enhance market competitiveness. Reduce manufacturing costs of the three core components—reduction retorts, center tubes, and cones—optimize steel grades to extend the service life of reduction retorts, lower auxiliary energy consumption and the material-to-magnesium ratio. 6. Implement cost-based management, systematically build a high-quality development operating model. Deepen comprehensive benchmarking to identify gaps, systematically tackle the "four major costs" of primary magnesium, energy, logistics, and quality, and improve the operation management and control system. 7. Strengthen safety and environmental protection fortifications, systematically enhance green development levels. Continuously strengthen safety and environmental compliance rectification, highlight risk control and inherent safety improvement in key areas, and accelerate the construction of green factories and low-carbon capacity building. 8. Major risk factors and countermeasures the company faces (1) Risk of fluctuations in main raw material prices The company's main business involves magnesium, aluminum alloys and deep processing, with main raw materials being magnesium and aluminum metals. Magnesium and aluminum prices are affected by supply-demand dynamics, global and Chinese economic conditions, and are closely related to factors such as the progress of automotive lightweighting and demand from the 3C industry. If future magnesium and aluminum prices experience wild swings, it will have a certain impact on the company's cost control and profitability. The company is increasing the self-supply ratio of raw materials, adjusting product mix, and increasing the proportion of deep-processed products to mitigate the impact of raw material price fluctuations. (2) Risk of market demand fluctuations The company's magnesium and aluminum lightweight alloy products are mainly used in automobiles, consumer electronics, and other fields. At present, seizing the opportunity of automotive lightweighting development, while stabilizing the supply of magnesium and aluminum alloy base materials, the company is focusing on expanding downstream deep-processing businesses such as magnesium alloy automotive die-casting parts, magnesium alloy building formwork, and aluminum alloy extrusion products. Market demand in areas such as automotive lightweighting progress and 3C electronics consumption is influenced by multiple factors including macroeconomics, industrial policies, and process technology innovation. If downstream market demand falls short of expectations, it will affect the company's operating performance level. The company is expanding the application of its products in various fields, increasing the penetration rate of products in various application fields, to reduce the risk of market demand fluctuations. Looking back at the Chinese magnesium market in H1 2026, affected by the concentrated production stoppages at magnesium plants earlier, the pattern of strong supply and weak demand was quietly reversed. Tight spot supply and low inventory provided a good foundation for a phased rise in the magnesium ingot market fundamentals. Coupled with market disturbances such as the explosive demand for magnesium alloys, speculative demand surged, and market purchasing enthusiasm ran high. Magnesium prices showed a staircase-like increase in Q1. Overly high expectations boosted magnesium plants' production enthusiasm, and magnesium production climbed all the way. By June 2026, China's primary magnesium production exceeded 110,000 mt. The persistently rising production increased sales pressure on magnesium plants. As both inventory and production grew, magnesium prices trended downward in a staircase-like manner in Q2, and overall magnesium prices in H1 showed an inverted V-shaped trajectory. From the price performance of 99.90% magnesium ingot (Fugu, Shenmu) in H1 this year, it can be seen: the average price of 99.90% magnesium ingot (Fugu, Shenmu) on June 30, 2026 was 15,850 yuan/mt, compared to its average price of 17,950 yuan/mt on December 31, 2025, its average price fell by 2,100 yuan/mt in H1, a decline of 11.7%. Its daily average price in H1 was 16,607.33 yuan/mt, compared to its daily average price of 16,241.45 yuan/mt in H1 2025, its daily average price increased by 365.88 yuan/mt YoY, an increase of 2.25%. According to SMM quotes, the price of 99.90% magnesium ingot (Fugu, Shenmu) on August 7 was 15,850-15,950 yuan/mt, with an average price of 15,900 yuan/mt, up 0.32% from the previous trading day. Low-priced supply in the market tightened, and magnesium prices edged up slightly. On the supply side, affected by rising coal costs and sustained losses, producers had a strong willingness to hold prices firm, but some sources still offered small discounts, leading to a divergence in selling attitudes. On the demand side, downstream users and traders maintained a strong wait-and-see sentiment, with weak restocking willingness, making only small-scale just-in-time procurement, and market trading was sluggish. Cost support limited the downside room, but production cuts have not yet effectively promoted inventory destocking, and social inventory pressure remained. In the short term, magnesium prices lack upward momentum and face downside limitations, likely to continue moving sideways. Subsequent attention should be paid to the downstream recovery pace and restocking signals.

On the macro front , this week copper prices drifted higher overall. Negotiations between the U.S., Iran, and Oman over the Strait of Hormuz made progress, and market expectations for a near-term reopening of the strait heightened. International oil prices pulled back accordingly, easing inflation worries from energy prices. Meanwhile, the U.S. July ADP employment figure came in below market expectations, and the cooling labour market also dampened market expectations for multiple US Fed rate hikes this year. Although some Fed officials still sent hawkish signals and the strait reopening arrangements are not yet fully clear, their pressure on copper prices was relatively limited. Additionally, expectations that the U.S. may impose tariffs on imported copper continued to attract copper cathode flows to the U.S., driving inventory accumulation at COMEX. Meanwhile, LME inventories and deliverable stocks kept declining, creating a clear regional mismatch of exchange inventories. U.S. tariff premiums and tightening supply outside the U.S. combined to push LME copper prices higher. As of 11:00 Beijing time on August 7, 2026, LME copper hit a low of $13,769/mt this week before shooting up to a high of $14,369/mt, up $600/mt from the low, a gain of about 4.36%. The most-traded SHFE copper contract hit a low of 105,140 yuan/mt, then rebounded to 108,470 yuan/mt, up 3,330 yuan/mt from the low, a gain of about 3.17%. Fundamentals side , as of August 6, SMM copper inventories across major regions in China increased by 7,300 mt WoW to 119,200 mt, extending the accumulation trend. On the supply side, arrivals of both domestic copper and imported copper cathode increased recently, with imported materials such as Peruvian large plates, ESOX, and Myanmar copper gradually circulating in the market. Combined with higher copper prices boosting suppliers’ willingness to sell, spot supply that was previously tight gradually eased. On the demand side, end-user orders were generally weak amid the traditional consumption off-season, and high copper prices further suppressed downstream purchase willingness. Market transactions were sluggish, and purchases remained mainly need-based. However, hi-quality copper and registered SX-EW copper supplies were relatively limited, and transactions improved for some low-priced cargoes, still providing some support to spot premiums. Looking ahead to next week , the market will continue to watch whether the U.S.-Iran deal materializes, the Strait of Hormuz reopening arrangements, and Fed officials’ comments on the future rate path. If expectations for the strait's reopening persist, oil prices and inflation worries will cool further, and together with a slowing U.S. labour market, macro sentiment may still support copper prices. Should negotiations falter again, geopolitical risks and energy price fluctuations could increase volatility in the futures market. In addition, watch out for a resurgence of resource protectionist policies outside China, which could further disrupt global copper flows. Fundamentals side, increasing domestic and imported copper supply will continue to ease domestic spot supply tightness, but high copper prices, inventory accumulation, and the off-season will limit downstream restocking, and SHFE copper spot premiums still face downward pressure. Next week, copper prices are expected to consolidate at highs with an upward bias, with LME copper likely to outperform SHFE copper, but SHFE copper’s upside room will still be constrained by weak domestic demand.

[SMM Tin Midday Commentary: US Dollar Fluctuations Drive Futures Fluctuations, the Most-Traded SHFE Tin Contract Consolidates in the Morning]