On 22 July, Sigma Lithium announced that it was negotiating a Conduct Adjustment Agreement, or TAC, with the government of Minas Gerais, Brazil, in response to a regulatory notice issued by the regional environmental authority, SUPRAM Jequitinhonha. The related fines total approximately US$540,000 and partly concern environmental matters dating from 2013 to 2022. Sigma has denied allegations including inaccurate regulatory disclosures, commercial sales before the relevant authorisation period, and adverse impacts on residences outside the licensed area. However, the company has agreed to use the TAC process to define corrective measures and expects to invest approximately US$1 million to restore certain activities that have been partially and temporarily suspended by inspectors. Sigma also stated that second-quarter production exceeded its previous target. From a financial perspective, the direct impact appears limited. The US$540,000 fine and approximately US$1 million of expected remediation expenditure are not material relative to the 270,000-tonne-per-year nameplate capacity of Phase 1 at the Grota do Cirilo operation. The more important issue is therefore not whether Sigma can absorb the cost, but which operational activities have been suspended and whether the remediation process could affect mining continuity or future expansion. The company has not specified the exact scope of the suspended activities. For a mining operation, this matters more than whether the concentrator itself remains operational. If the restrictions apply only to limited environmental procedures or auxiliary works, the near-term production impact may remain modest. However, if they affect waste-rock disposal, mining activities or site access roads, upstream ore supply could gradually come under pressure as existing stockpiles are consumed, even if the concentrator is not directly shut down. Sigma’s emphasis on second-quarter production exceeding target demonstrates that the operation had been performing well, but it does not fully address the potential effect of the regulatory restrictions on third-quarter and subsequent production. The latest notice should also not be viewed as an isolated event. In January 2026, Brazil’s labour authorities ordered Sigma to stop using three waste-rock piles at Grota do Cirilo on the grounds that they could pose a serious and immediate risk to employees and nearby communities. Brazil’s National Mining Agency later concluded that it had not identified an imminent geotechnical risk, while still noting deficiencies in drainage and areas of localised erosion that required remediation. In May, labour inspectors reportedly issued another fine after Sigma continued depositing material at one of the restricted waste-rock piles. Although different regulators have taken different views on the severity of the risk, the repeated interventions point to a broader issue: waste management and environmental compliance are becoming persistent operational constraints at Grota do Cirilo. From a supply perspective, the available information does not yet justify a material reduction in Phase 1 output assumptions. A TAC is a commonly used mechanism in Brazil through which companies and regulators agree on corrective measures and implementation schedules. The relatively limited remediation expenditure disclosed by Sigma also suggests that the company believes the matter can be resolved without a prolonged shutdown. Under the base case, the probability of a long-term, comprehensive restriction on Phase 1 production still appears low. Nevertheless, the project’s operational risk weighting should be increased, and downside scenarios should be retained in annual production forecasts. The greater concern lies with Phase 2. Sigma plans to increase total Grota do Cirilo capacity from 270,000 tonnes to 520,000 tonnes per year. This expansion would involve not only additional processing capacity, but also higher mining intensity, greater waste-rock volumes and more complex land-use, environmental and community requirements. If the existing waste-management and environmental issues remain unresolved, the Phase 2 permitting, construction and commissioning schedule could face additional constraints. When mining projects encounter regulatory challenges, the market often focuses first on the size of the fine. In practice, the more important variable for valuation and supply forecasting is usually time. A few million dollars of remediation expenditure may be immaterial, but a delay of six to twelve months can have a much larger effect on project net present value and the timing of future supply. Sigma has disclosed its estimated remediation cost, but has not quantified how long the suspended activities may remain restricted or whether the TAC could impose additional conditions on Phase 2. A more appropriate modelling response would therefore be to widen the downside range for Phase 1 production, while reducing the probability that Phase 2 starts and ramps up according to the company’s existing timetable. The broader industry implication is also important. Sigma is one of Brazil’s earliest large-scale lithium concentrate producers and exporters, and a flagship project within the country’s “Lithium Valley” strategy. Its experience demonstrates that Brazil’s hard-rock lithium sector cannot be assessed solely on the basis of resource size, concentrator capacity and corporate expansion targets. Waste-rock management, community relations, regulatory coordination and permitting execution will also determine how much supply projects can deliver consistently to the market. Overall, the latest development does not yet amount to a major near-term supply disruption. Phase 1 production may continue, but environmental and regulatory issues have evolved from a one-off disturbance into an operational variable that requires ongoing monitoring. The factor that should be marked down is not the existing 270,000-tonne nameplate capacity itself, but confidence in its stable operation and in the timing of Phase 2. The key issues to monitor are the specific corrective measures included in the TAC, the scope and duration of the suspended activities, and whether the Phase 2 expansion requires amendments to its environmental approvals or construction schedule. Until these points are clarified, above-target second-quarter production confirms that the operation has the technical ability to produce, but it does not yet demonstrate that future supply will be delivered in line with the company’s stated plan. SMM Lesley Yang yangle@smm.cn

[Ningbo Zinc: Futures Zinc Price Edges Down, Traders Continue to Raise Spot Offers] In the Ningbo market, the transaction price of mainstream brand 0# zinc is around 24,345-24,460 yuan/mt. The quotes for conventional brands in Ningbo are at a premium of 35 yuan/mt against the 2608 contract, and a premium of 20 yuan/mt against Shanghai spot zinc. Mainstream offers in Ningbo are against the 2608 contract...

The Philippines’ Energy Regulatory Commission is working to modernize the country’s transmission grid through the 2026 edition of the Philippine Grid Code, aiming to better accommodate variable renewables such as solar and storage technologies including BESS and pumped hydro. The updated code will introduce technical requirements for solar-plus-storage plants and standalone storage systems using grid-forming inverters to improve grid stability and system response, alongside new cybersecurity, planning, reserve and reliability rules. ERC is also proposing reforms to net metering and distributed energy resources, including shortening net-metering interconnection timelines from 20 to 10 working days, removing the 1MW DER cap, allowing multi-site crediting and prioritizing renewable dispatch in off-grid areas. SMM believes these grid and net-metering reforms could accelerate residential, C&I solar and solar-plus-storage deployment as electricity tariffs and solar import demand rise in the Philippines.

According to local media in the DRC on July 10, the country’s General Directorate of Taxes (DGI) sealed the offices and some facilities of Kamoto Copper Company (KCC) in Kolwezi, Lualaba Province, on July 9. The DGI stated that KCC is involved in a tax arrears case amounting to nearly $3 billion. The sealing action led to the evacuation of some personnel and a temporary halt to copper and cobalt production activities at the relevant sites. The extent and duration of the sealing, as well as its actual impact on the mine and smelting systems, remain to be further confirmed. Local media, citing sources close to the matter, reported that the tax authority and relevant companies under Glencore had been in negotiations over the dispute for nearly 12 months. The DGI allegedly questioned the relevant enterprises for understating transfer prices in mineral export transactions and transferring some value to overseas affiliates. Glencore denied the tax authority’s assessment, calling the claims “utterly baseless.” Therefore, the approximately $3 billion is still the amount sought by the DRC tax authority and has not yet been finalized as a judicial ruling. Public information shows that KCC is a large copper-cobalt project controlled by Glencore, with its main products including copper cathode and cobalt hydroxide. According to SMM, KCC’s copper cathode production has been around 190,000 mt in each of the past two years. If the sealing measures continue and materially affect production or product shipments, it is expected to cause periodic disruptions to copper and cobalt supply from the DRC. Going forward, close attention should be paid to the progress of KCC’s operational recovery and the resolution of the tax dispute.

Price In H1, China's lithium hydroxide prices showed a trend of "surge—consolidation at highs—loosen and pull back", with the price center rising initially and then falling amid the interplay of multiple factors. In January, prices surged sharply. Concentrated maintenance at leading lithium chemical plants tightened spot supply, while costs of lithium carbonate and lithium ore continued to climb, prompting lithium chemical plants to hold prices firmly. This drove the monthly average lithium hydroxide price to soar 65% MoM. Although ternary cathode material enterprises maintained just-in-time procurement and were cautious about spot orders, and the price spread between Chinese and overseas markets led to some import backflows, phased shortages and cost support still pushed prices to highs. In February, prices consolidated at highs with trading activity turning sluggish. Macro sentiment dragged lithium prices lower overall, but smelters' firm pricing sentiment persisted. Downstream ternary cathode material manufacturers had sufficient inventories and some entered maintenance, easing raw material tightness, with purchases mainly based on monthly average prices. During the Chinese New Year, lithium hydroxide transportation stalled due to its hazardous chemical nature, and the market entered a seasonal quiet period. Post-holiday restocking demand was mediocre, and prices lacked upward momentum, resulting in wild swings throughout the month. In March, price increases narrowed significantly. Battery cell manufacturers' cargo pick-up pace fell short of expectations, new orders for ternary cathode materials were limited, and increased customer-supplied materials mid-month caused spot orders to plummet. Market trading was sluggish, the upward price channel was blocked, and the monthly average price edged up only 3.4% MoM. In April, prices fell first and then rose. In the first half, limited new orders for ternary cathode materials led to muted demand for spot orders, and prices were slightly under pressure. In the second half, driven by pre-holiday stockpiling and new orders, ternary cathode material manufacturers increased inquiries, and combined with sharp rises in lithium carbonate and lithium ore prices, lithium hydroxide prices strengthened, with the monthly average price up 2.73% MoM. In May, prices retreated after a rapid rise. In the first half, expectations of improving demand and supply-side disruptions pushed lithium carbonate and lithium ore prices higher, pulling lithium hydroxide up in tandem. In the second half, lithium market sentiment weakened, traders and material manufacturers increased point-price transactions, and with the trend of ternary demand already set, upstream suppliers' firm pricing stance loosened, leading to a slight correction. The monthly average price reached 174,000 yuan/mt, up 13.6% MoM. In June, prices pulled back notably with heightened price range volatility. Supply disturbances at the lithium resource side were frequent, and market fluctuations amplified significantly. Suppliers became cautious, quoting prices in line with market conditions. Upstream players adjusted prices flexibly, and traders maintained deep discounts (discount of more than 15,000 yuan/mt to the most-traded lithium carbonate contract). On the demand side, total ternary cathode material demand remained weak MoM, but in the 135,000-145,000 yuan/mt range, downstream players showed strong willingness to stockpile at lows, forming some bottom support and intensifying price range consolidation. The monthly average price fell 11.52% MoM. From a price trend perspective, the linkage between lithium hydroxide prices and lithium carbonate futures prices strengthened over the past six months. On the one hand, upstream enterprises adopted a “lithium carbonate price × discount coefficient” approach in pricing as a floor price; on the other, traders leveraged the lithium carbonate-lithium hydroxide price spread and price differences in and outside China, importing lithium hydroxide and selling it with reference to lithium carbonate futures prices, further reinforcing this price linkage. Production Production side: In H1 2026, China’s total lithium hydroxide production reached 172,000 mt, up 21% YoY, with relatively robust downstream demand driving notable growth. By output structure, the smelting segment contributed the largest share at around 88%. Among this, production ramp-ups at new lines of top-tier players added some volume, while other enterprises mainly relied on downstream orders for steady output; overall smelting segment production increased 18% compared to the same period last year. For the causticisation segment, most operating enterprises maintained stable production, with the H1 CR5 reaching 72% and market concentration remaining at a high level. Regarding capacity utilization rate, although some capacity had already been switched to lithium carbonate production, the lithium hydroxide industry’s operating rate hovered below 50% throughout the first half, and overcapacity trends persisted. Cost and profitability: In the smelting segment, lithium ore raw materials were relatively tight in H1 2026, with ore prices staying at a relatively high level and highly linked to lithium carbonate prices, providing strong cost support for lithium hydroxide. As a result, non-integrated producers faced significant sales pressure, and their product discount prices did not fall further, offering marginal support to profit margins at current price levels. In the causticisation segment, supply of salt-lake-based lithium chemicals increased over the past six months, and raw materials for causticisation were relatively abundant; the linkage between actual enterprise procurement costs and industrial-grade lithium carbonate quotes weakened, alleviating cost pressure on enterprises purchasing lithium carbonate externally to some extent and resulting in actual causticisation segment profitability exceeding theoretical estimates. Imports and Exports The pattern of imports and exports also underwent a notable reversal. On the export side, since H2 2025, some overseas ternary enterprises shifted to outsourcing processing to domestic toll manufacturers, causing products originally destined for export to be delivered domestically and effectively pushing down exports. Meanwhile, overseas ternary cathode material demand remained sluggish, downstream material plants showed weaker purchase willingness for Chinese lithium hydroxide, and local production lines outside China gradually ramped up, jointly keeping exports at low levels over the past six months. On the import side, driven by weak overseas demand, high prior inventories, and arbitrage opportunities, import volumes stayed at a relatively high level, further reinforcing the net import trend. Balance and Inventory The surge in import data led to a supply surplus in most months in H1. However, considering directly usable lithium hydroxide products, the overall market remained in a relatively tight balance, effectively supporting upstream price control efforts. Regarding inventory levels, current lithium hydroxide inventories have improved significantly compared to the same period last year, driven primarily by two factors: first, some inventory was digested by converting into lithium carbonate and flowing into the market; second, operating enterprises flexibly adjusted their output pace, bringing days of inventories down to approximately one month. Outlook Going forward, although the LFP route continues to squeeze the ternary route, ternary cathode materials still face no rivals in the high-nickel segment. Additionally, the cost advantage of 6-series materials has opened up further possibilities for the ternary route. From the perspective of end-user production schedules, ternary battery demand is expected to maintain good momentum in H2 2026, with growth of approximately 36% compared to H1, which in turn brings about a 7% QoQ increase in demand for ternary cathode material output in H2. As ternary cathode materials continue trending toward higher nickel content, this generates a certain incremental growth trend in demand for lithium hydroxide. Meanwhile, considering that most lithium hydroxide production lines have the flexibility to switch or use carbonisation purification, lithium hydroxide production is expected to see approximately 6% growth in demand QoQ. Combined with a slight recovery in ternary demand outside China, the supply-demand balance for lithium hydroxide is expected to remain tight from 2026 to 2027. In terms of pricing, given the highly concentrated supply structure, lithium hydroxide prices are primarily determined by the supply-demand relationship of its own industry chain and closely follow the price trend of lithium ore and lithium chemicals, currently consolidating above 150,000 yuan per mt. Finally, regarding the listing of lithium hydroxide futures, Q2 saw frequent related developments. The Guangzhou Futures Exchange and the Lithium Branch of the China Nonferrous Metals Industry Association explicitly stated their intention to continue strengthening cooperation and jointly promote the futures listing of lithium hydroxide and other lithium battery industry chain products; the draft of Guangzhou's 15th Five-Year Plan for the financial sector also explicitly supports GFEX in listing new energy futures products such as lithium hydroxide. The industry side followed closely with intensive preparations. In June, Yahua, Chengxin Lithium, and Tianqi Lithium all announced approval to apply to GFEX for designated lithium hydroxide delivery factory warehouse qualifications; additionally, Milkyway’s shareholder meeting reviewed and approved a proposal for its subsidiary to apply to become a designated delivery warehouse for battery-grade lithium hydroxide on GFEX. According to media reports, lithium chemical plants (Ganfeng Lithium, Tianqi Lithium, Yahua Group, etc.) are already building out factory warehouse systems, but lithium hydroxide, due to its high hazardous chemical storage thresholds—strong corrosiveness, exothermic reaction with water, and requirement for inert gas protection—has seen no logistics players enter this product category so far. At the market level, some traders had already positioned themselves in advance due to expectations of the futures listing, and the number of traders involved in lithium hydroxide import trade increased significantly. In summary, the preparations for the listing of lithium hydroxide futures are progressing in an orderly manner, with positive official statements and accelerated industrial support.

★ macro ★ 01 ★★ [The central bank achieved a net withdrawal of 278.5 billion yuan from open market operations.] The central bank conducted 10 billion yuan of 7-day reverse repo operations today, with a bid volume of 10 billion yuan and an allotment volume of 10 billion yuan, at an operation rate of 1.40%, unchanged from the previous level. As 288.5 billion yuan of 7-day reverse repos matured today, a net withdrawal of 278.5 billion yuan was achieved on the day. 02 ★★★ [NBS: June Consumer Prices Rose 1.0% YoY] Data from the NBS showed that in June 2026, the national CPI rose 1.0% YoY. Urban areas rose 1.0%, rural areas rose 0.8%; food prices fell 1.6%, non-food prices rose 1.5%; consumer goods prices rose 1.1%, services prices rose 0.8%. In H1, the national CPI rose 1.0% YoY. In June, the national CPI fell 0.3% MoM. Urban prices fell 0.4%, rural prices fell 0.3%; food prices fell 0.4%, non-food prices fell 0.3%; consumer goods prices fell 0.6%, services prices remained flat. 03 ★★★ [ [NBS: June Industrial Producer Prices Rose 4.1% YoY] ] Data from the NBS showed that in June 2026, the national PPI rose 4.1% YoY and fell 0.3% MoM. Industrial producer purchasing prices rose 6.4% YoY and fell 0.2% MoM. In H1, industrial producer prices rose 1.5% YoY, and industrial producer purchasing prices rose 2.4%. ★ Industry and Downstream ★ 01 ★★★ [Zhejiang Activates Level IV Typhoon Emergency Response] The 9th typhoon of this year, Bavi, was located on the ocean surface about 1,210 kilometers east-southeast of Keelung City, Taiwan, at 5:00 a.m. on July 9, with maximum sustained winds of Force 16 near its center (super typhoon). It is forecast to move northwest at about 15–20 km/h, gradually turning to move northwest tonight, and gradually approaching the waters east of Taiwan. Affected by Bavi, winds in the southern East China Sea will gradually strengthen to Force 8–11 on the night of the 9th. According to the Zhejiang Provincial Emergency Plan for Flood Control, Typhoon Prevention and Drought Relief and the work plan for defending against Typhoon Bavi, after assessment and consultation, the Zhejiang Provincial Flood Control and Typhoon Prevention Headquarters decided at 9:00 a.m. on July 9 to adjust the maritime typhoon emergency response to a Level IV typhoon emergency response. 02 ★★ [H1 NEV Production and Sales Both Exceeded 7 Million Units] On July 9, the latest data released by CAAM showed that from January to June this year, China’s NEV market saw steady growth in production and sales as well as exports. NEV production and sales totaled 7.438 million units and 7.446 million units, up 6.7% YoY and 7.3% YoY, respectively; in June, NEV new-vehicle sales accounted for nearly 60% of total new-vehicle sales. On the export front, from January to June, auto exports reached 5.096 million units, up 65.3% YoY. Of this, NEV exports were 2.355 million units, up 1.2 times YoY. 03 ★★ [China Index Academy: Full-Year Floor Space of Newly Built Commercial Buildings Sold Is Expected to Fall 7.8% YoY] China Index Academy released Summary of China’s Real Estate Market in H1 2026 & Trend Outlook for H2, expecting that in H2, policies on both the supply and demand sides will continue to gain traction, and stabilizing home prices may become a key focus. Overall, the real estate market remains in the process of consolidating at lows, and the market recovery will continue to show divergent characteristics. Looking ahead to H2, the second-hand housing market in core cities is expected to maintain a certain level of activity; sustained improvement in transactions, together with a stabilization in listings, will further narrow the pace of price declines, and the foundation for price stabilization in some cities will gradually strengthen. For new homes, affected by a low base in the same period of 2025, the YoY decline in nationwide new-home sales in H2 is expected to narrow gradually, but a comprehensive market recovery will still take time. 04 ★★★ [Shipbuilders’ Orders Scheduled Through 2030, Industry Sees Clear Upcycle Opportunities] Riding the wave of the global shipbuilding industry’s recovery, China’s shipbuilding sector is seeing clear upcycle opportunities. In H1, Hengli Heavy Industry signed 207 new vessel orders, with cumulative orders on hand exceeding 500 vessels, and its delivery schedule has been locked in through 2030; China State Shipbuilding’s delivery cycle is also scheduled through 2030; and Sumec’s newly won orders in Q1 2026 surged by more than 600% YoY. Overall, orders at leading shipbuilders in China are generally full, and industry dividends are being released. Amid the high-prosperity cycle, potential risks also warrant attention. Analysts noted that overly rapid capacity expansion under optimistic sentiment should be guarded against. In addition, variables such as trade policy disruptions, divergence in segmented demand, and shortcomings in fuel technologies may constrain the industry’s upside room and profitability. 05 ★★ [ Mongolia’s Coal Exports Reached 59.21 Million mt in H1 2026 ] According to statistical data released by Mongolia’s customs authorities, from January to June 2026, Mongolia’s cumulative coal exports totaled 59.2149 million mt, with average monthly coal exports close to 10 million mt, an increase of 21.34 million mt compared to the same period last year, up 56.3% YoY. Among them, hard coal exports were 56.8428 million mt, up 62.0% YoY; lignite exports were 2.3721 million mt, down 15.2% YoY. In June, Mongolia’s coal exports continued to surge, with monthly exports reaching 10.3057 million mt, up 69.0% YoY and up 4.8% MoM. Of this, hard coal exports stood at 9.9272 million mt, up 72.7% YoY and up 4.3% MoM; lignite exports were 378,400 mt, up 8.8% YoY and up 17.8% MoM. ★ Other Hot Topics ★ ⭕ [Tata Steel’s Q1 FY2027 India Crude Steel Production at 5.82 Million mt] Indian steelmaker Tata Steel Group released its production and delivery data for Q1 FY2027 (April 1, 2026 to June 30, 2026). Tata Steel India’s crude steel production reached 5.82 million mt, down about 6% MoM and up 11% YoY, primarily driven by higher output at the Jamshedpur and Kalinganagar plants; during the same period, its India deliveries stood at 5.17 million mt, down about 16% MoM and up about 9% YoY, with domestic deliveries up 11% YoY. ⭕[Fangda Jiugang Successfully Trial-Rolls 36mm Large-Size HG6E/C High-Strength Seismic Rebar] Recently, Fangda Jiugang successfully trial-rolled 36mm large-size HG6E/C high-strength seismic rebar for the first time. Testing shows that all performance indicators, dimensional accuracy, and surface quality comply with relevant standards, marking a major breakthrough in the high-end construction steel segment for the enterprise. HG6E/C is a 635MPa-grade ultra-high-strength seismic rebar, a high-grade, high-end specialty steel for construction, offering significant comprehensive advantages over conventional rebar used in general engineering. ⭕ [Tsingshan Special Material Stainless Steel Deep-Processing Project Commissioned] The “Four-Chain” Integration Promotion Meeting for the stainless steel industry chain and the Tsingshan Special Material Launch & Development Conference were held in Zhouning County. Attendees included Xiang Guangda, Chairman of Tsingshan Holding Group; Zhang Jimin, Chairman of Xintuo Group; Zhang Longqiang, Deputy Secretary General of the China Iron and Steel Association (CISA) and Party Secretary and President of the Metallurgical Industry Information and Standards Research Institute; Li Yan, Member of the Standing Committee of the Municipal Party Committee and Executive Vice Mayor; Wang Qingjie, Executive President of the Stainless Steel Branch of CISA; Zhang Luyao, Chairman of Fujian Tsingshan Special Materials Co., Ltd.; Lei Chunxiong, Secretary of the County Party Committee; Yang Chenxia, Director of the Comprehensive Division of the Provincial Department of Industry and Information Technology; and Zheng Jinsi, Deputy Director of the Municipal Bureau of Industry and Information Technology. The meeting was chaired by Chen Dongyue, Deputy Secretary of the County Party Committee, Secretary of the Party Leadership Group of the County Government, and Acting County Magistrate. * This report is an original work and/or compilation of SMM Information & Technology Co., Ltd. (hereinafter referred to as "SMM"), and SMM holds the copyright in accordance with the Copyright Law of the People's Republic of China and other applicable laws, regulations, and international treaties. Without written permission, no one may reproduce, modify, sell, transfer, display, translate, compile, and disseminate or otherwise disclose the above content to any third party or permit any third party to use it. Once discovered, SMM will pursue legal liability for infringement, including but not limited to demanding the assumption of contractual liability for breach of contract, restitution of unjust enrichment, and compensation for direct and indirect economic losses. 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Once discovered, SMM will pursue legal liability for infringement, including but not limited to demanding the assumption of contractual liability for breach of contract, restitution of unjust enrichment, and compensation for direct and indirect economic losses. The views in this report are based on information collected from the market and a comprehensive assessment by the SMM research team. The information provided in this report is for reference only, and risks are borne by the user. This report does not constitute direct investment research advice. Clients should make prudent decisions and not replace their independent judgment with this report. Any decision made by clients has nothing to do with SMM. Furthermore, any losses or liabilities resulting from unauthorized and illegal use of the views in this report have nothing to do with SMM. SMM reserves the right to modify and the final interpretation of the terms of this statement.

Yahua Group said its Zimbabwe-based KMC company is accelerating construction of its lithium sulfate processing project. With a total investment of approximately US$200 million, the project includes a smelter and a sulfuric acid plant, designed to process 350,000 mt of lithium concentrate annually and produce 75,000 mt of lithium sulfate per year. Commercial operation is scheduled for 2027. KMC is also developing a tin-niobium-tantalum separation project to enhance overall mineral resource utilization.

★ Macro ★ 01 ★★ [Central Bank Net Injection of 10 Billion Yuan via Open Market Government Bond Trading in June] The People's Bank of China (PBOC) recently released data on liquidity injections through various tools in June 2026, showing a net injection of 10 billion yuan through open market government bond trading during the month. According to statistics, net injections via open market government bond trading totaled 300 billion yuan in the first six months of this year. The PBOC’s Q1 2026 monetary policy implementation report stated that since the beginning of the year, the PBOC has conducted regular government bond trading operations, flexibly adjusting the scale of operations based on the need for base money injection and bond market conditions. The June injection data also showed a net injection of 200 billion yuan through the medium-term lending facility (MLF) and a net withdrawal of 137.2 billion yuan through other structural monetary policy tools. In addition, net injections through 7-day reverse repos amounted to 582.6 billion yuan, while other-maturity reverse repos saw a net injection of 300 billion yuan. 02 ★★ Oil Prices Post Biggest Single Drop of the Year Oil prices experienced a "three consecutive decline." According to the National Development and Reform Commission (NDRC), starting from 24:00 on July 3, the retail prices of gasoline and diesel (standard grade) will be cut by 950 yuan and 915 yuan per mt, respectively. This adjustment marks the largest single reduction this year. Based on calculations by institutions, the price cut is equivalent to a decrease of 0.73 yuan per liter for 92-octane gasoline, 0.77 yuan per liter for 95-octane gasoline, and 0.78 yuan per liter for 0# diesel. For a typical private car with a 50-liter fuel tank, filling up a full tank of 92-octane gasoline will save about 36.5 yuan. ★ Industry and Downstream ★ 01 ★★ [Chinese Passenger Vehicle Market Share in Europe Surpasses Japan for the First Time] According to the latest data from the European Automobile Manufacturers' Association (ACEA), China's passenger vehicle market share in Europe surpassed that of Japan for the first time in May. Data shows that in May, five Chinese automakers sold a total of 138,400 vehicles in 31 European countries, up 65% YoY, while six Japanese automakers sold 130,400 vehicles in the same 31 countries, down 3% YoY. 02 ★★ [All 200 Billion Yuan in Funding for the Program of Large-Scale Equipment Upgrades and Consumer Goods Trade-Ins Has Been Disbursed This Year] Recently, the National Development and Reform Commission (NDRC) has issued the third batch of equipment upgrade project lists and funding allocations this year, supporting equipment renewals in fields such as energy and power, logistics, education, elderly care institutions, offline consumer commercial facilities, old operating trucks, residential old elevators, and the installation of elevators in old residential communities. Since the beginning of this year, the NDRC, together with relevant departments, has optimized the scope of support, improved the application process, strengthened review and approval, accelerated the pace of work, and disbursed equipment upgrade funds in three batches. At present, the full-year 200 billion yuan equipment renewal funds have been fully allocated, supporting about 11,000 projects across 22 sectors, providing strong support for accelerating industrial upgrading, promoting green development, improving people’s well-being, and strengthening security safeguards. From January to May this year, investment in equipment and tool purchases increased by 9.3% YoY, accounting for 17.5% of total investment, up 2.2 percentage points from the same period last year. 03 ★★ [CISA: Monthly Report on Main Steel-Using Industries, January-May] From January to May, the construction sector among main steel-using industries remained sluggish, while manufacturing continued its overall growth. Specifically, the real estate market continued its adjustment, and infrastructure investment slowed compared with earlier periods. The value added of the machinery industry and export value of electromechanical products maintained growth, automobile production continued to edge down slightly, all three major shipbuilding indicators in the shipbuilding industry grew rapidly, production of the three major white goods in the home appliance industry all maintained growth, and container production continued to decline. 04 ★★ [June Heavy-Duty Truck Market Sales Up 18% YoY] According to statistics from cvworld.cn, China’s heavy-duty truck market sold about 115,000 units in June 2026, up about 5% MoM from May and up 18% from 98,000 units in the same period last year, while the YoY growth rate slowed somewhat compared with the March-May period. This was also a record high for June sales in the past five years. In January-June, cumulative heavy-duty truck sales in China reached about 660,000 units, up about 22% YoY. ★ Other Hot Topics ★ ⭕ [Shenzhen Property Market Continues Stable and Positive Momentum] According to the Shenzhen Housing and Construction Bureau, in June, the Shenzhen property market sustained the strong momentum following the April 29 new policy. Total online registrations for new commercial housing and second-hand residential properties in the city reached 8,878 units, up 14.2% YoY, and the real estate market continued its stable and positive trend. In the new home market, online registrations for new commercial residential properties in Shenzhen totaled 3,785 units in June, up 15.6% YoY, with the new home market continuing to improve. High-quality residential projects remained highly sought after. The commercial property market also performed well, with business apartments highlighting cost-effectiveness advantages. In H1, first-hand and second-hand office buildings and business apartments in the city recorded transactions of 6,567 and 6,238 units, respectively, soaring 103.0% and 70.2% YoY, respectively. ⭕ [Shenlong Group’s “Yunnan Strip New Material Base” Fully Put into Operation] On July 2, 2026, the galvanizing workshop of Yunnan Shenlong Tengda New Material Technology Co., Ltd. (hereinafter referred to as “Yunnan Shenlong”) reported another success—the continuous hot-dip galvanizing/aluminum-zinc line with an annual capacity of 250,000 mt, contracted by Huangshi Shanli Technology Co., Ltd. (hereinafter “Shanli Technology”), was successfully put into operation. This was the third line successfully commissioned within a month, following the startup of a continuous hot-dip galvanizing line with an annual capacity of 500,000 mt on June 1 and a continuous hot-dip galvanizing/Zn-Al-Mg line, also with an annual capacity of 500,000 mt, on June 16 of this year. It marks the full commissioning of the three continuous hot-dip galvanizing/aluminum-zinc/Zn-Al-Mg lines built by Shanli Technology for Yunnan Shenlong, injecting strong new momentum into the supply of high-end new coated sheet and strip materials for China’s southwestern region! *This report is an original work and/or a compilation work of SMM Information & Technology Co., Ltd. (hereinafter referred to as “SMM”). SMM lawfully holds the copyright and is protected under the Copyright Law of the People’s Republic of China and other applicable laws, regulations, and international treaties. Without written permission, the content may not be reproduced, modified, sold, transferred, displayed, translated, compiled, disseminated, or otherwise disclosed to any third party, nor may any third party be authorized to use it. 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★Macro★ 01 ★★ [State-owned Major Bank's 5-Year Personal Certificate of Deposit 'Reappears' with Annualized Interest Rate of 1.6%] Although over the past two years, mainstream major state-owned banks and joint-stock banks ceased issuing certificates of deposit with terms over 3 years. But just as H2 began, a state-owned major bank reintroduced them. On July 1, Bank of China announced on its official website that it would issue the first tranche of personal certificates of deposit for 2026, offering seven terms: 1-month, 3-month, 6-month, 1-year, 2-year, 3-year, and 5-year. As long-term certificates of deposit issued by nationwide commercial banks have largely disappeared from the market, the issuance by Bank of China this time means that 5-year certificate of deposit products from state-owned major banks 'reappear.' 02 ★★ [Central Bank: Net Injection of 200 Billion Yuan via Medium-Term Lending Facility (MLF) in June] The People's Bank of China (PBOC) announced on its official website today the liquidity injection through various central bank tools for June 2026. Data showed that in June, net injection via MLF was 200 billion yuan, net injection via standing lending facility (SLF) was 0 yuan, and net injection via other structural monetary policy tools was -137.2 billion yuan. Meanwhile, in open market operations, in June, net injection via government bond trading in the open market was 10 billion yuan, net injection via 7-day reverse repo was 582.6 billion yuan, net injection via central treasury cash management was 0 yuan, and net injection via reverse repos of other tenors was 300 billion yuan. ★Industry and Downstream★ 01 ★★ [NDRC's Liu Gang Leads Team to China Iron and Steel Association for Work Survey] To gain an in-depth understanding of the steel industry's development, on June 29, Liu Gang, Deputy Director of the NDRC Price Monitoring Center, led a team to CISA to conduct a work survey, and held discussions with Diao Li, Deputy Secretary General and Director of the Information and Statistics Department of CISA, as well as Li Xiaochuan and Li Baojun, Deputy Directors of the Information and Statistics Department. The two sides, considering the new characteristics of steel industry development at this stage, conducted in-depth exchanges on aspects such as price trends across the industry chain's upstream and downstream, compilation of price indices, and optimization of monitoring indicators. 02 ★★ [2025 Annual Dual-Credit Calculation Results for Chinese Passenger Vehicle Enterprises Released] Four departments, including the Ministry of Industry and Information Technology, the Ministry of Commerce, the General Administration of Customs, and the State Administration for Market Regulation, recently jointly announced the 2025 average fuel consumption and NEV credit status of Chinese passenger vehicle enterprises. In 2025, a total of 108 passenger vehicle enterprises in China produced/imported 24.629 million passenger vehicles (including passenger NEVs, excluding export passenger vehicles), with an actual average fuel consumption under WLTC conditions of 3.38 liters per 100 kilometers, average carbon dioxide emissions of 80.22 grams per kilometer, positive fuel consumption credits of 53.553 million points, negative fuel consumption credits of 9.412 million points, positive NEV credits of 21.94 million points, and negative NEV credits of 1.599 million points. 03 ★★ [Changsha One Commercial-Residential Plot Sold at Reserve Price of 165 Million Yuan] On July 2, Changsha auctioned one commercial-residential plot in Furong District, with a planned GFA of 28,109.20 sq m (commercial-residential ratio of 1:9), a plot ratio of 5, a starting price of 165 million yuan, and a starting floor price of 5,884 yuan per sq m. Finally, the local private enterprise Hunan Dayou Real Estate Development Co., Ltd. won the plot at the reserve price of 165 million yuan. 04 ★★ [Nanjing One Residential Plot Sold at Reserve Price of 570 Million Yuan] On July 2, Nanjing auctioned one residential plot in the Qilin Area of Jiangning District, with a planned GFA of 56,779 sq m, a plot ratio of 2.4, a starting price of 570 million yuan, and a starting floor price of 10,041 yuan per sq m. Finally, Nanjing Science and Technology Innovation Investment Co., Ltd. won the plot at the reserve price of 570 million yuan. 05 ★★ [South Korea Imposes Anti-Dumping Duties on Carbon Steel and Alloy Steel HRC Involving China] According to China Trade Remedies Information, on June 23, South Korea's Ministry of Economy and Finance issued Order No. 35, officially imposing anti-dumping duties on carbon steel and alloy steel HRC originating from China and Japan, with the duty rate for Chinese products ranging from 28.16% to 33.10%; meanwhile, it approved the price undertakings proposed by three Japanese enterprises and six Chinese enterprises, and will not impose anti-dumping duties on enterprises that comply with the price undertakings. The announcement took effect on the date of its issuance. ★ Other Hot Topics ★ ⭕ [China's State Flood Control and Drought Relief Headquarters Launches Level-IV Emergency Response for Flood and Typhoon Prevention in Hainan, Guangxi, and Guangdong] According to meteorological forecasts, the tropical depression over the South China Sea is expected to develop into a typhoon on July 2, make landfall on the eastern coast of Hainan Island on the afternoon or evening of July 3, and then make a second landfall on the coast of Guangxi or northern Vietnam on the afternoon or evening of July 4. As a result, it is expected that from July 3 to 5, parts of Hainan Island, Guangdong, and Guangxi will experience heavy to torrential rain, with localized areas seeing extremely heavy downpours. In accordance with the relevant provisions of the National Flood Control and Drought Relief Emergency Plan, the State Flood Control and Drought Relief Headquarters decided to launch a Level-IV emergency response for flood and typhoon prevention in Hainan, Guangxi, and Guangdong at 12:00 on July 2, and dispatched a working group to Hainan for frontline guidance and assistance. ⭕ [US Treasuries Rise as Weak Employment Report Dampens Rate Hike Expectations] US Treasuries rose after a weaker-than-expected US employment report prompted traders to scale back expectations of interest rate hikes by the US Fed in the coming months. The two-year US Treasury yield, which is most sensitive to monetary policy changes, fell 6 basis points to 4.11%, while the 10-year yield fell 2 basis points to 4.46%. Interest rate swaps showed that traders expected the probability of the US Fed raising interest rates at its meeting later this month to be around 20%, down from 33% before the data release. The market was pricing in fewer than two 25-basis-point rate hikes by March 2027. ⭕ [US June Nonfarm Payrolls Increased by 57,000, Far Below Market Expectations] US nonfarm payrolls increased by 57,000 in June (estimate: 113,000; prior: 172,000). Private payrolls rose by 49,000 (prior: 97,000; estimate: 107,000). Manufacturing payrolls increased by 3,000 (prior: a decrease of 2,000), matching expectations; the forecast range of 15 surveyed economists was a decline of 1,000 to an increase of 10,000. ⭕ [Saudi Arabia's Crude Oil Exports Approach Pre-War Levels] Saudi Arabia's crude oil exports are near pre-war levels; as of Wednesday, the kingdom exported 6.3 million barrels per day over a six-day period. *This report is an original work and/or compilation work exclusively created by SMM Information & Technology Co., Ltd. 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Recently, FTXT Energy, jointly with Brazil's SENAI CIMATEC (Innovation and Advanced Technology Center of the National Service for Industrial Training), officially launched a road test and validation project for hydrogen fuel cell trucks in Brazil. This test is being jointly advanced by the technical team of FTXT Energy, the commercial vehicle engineering team of Great Wall Motor, and the expert team of SENAI CIMATEC. The test will be conducted in stages to validate aspects such as vehicle power performance, driving range, high-pressure hydrogen storage safety, and real-world local road operating conditions. Previously, the "New Long March No. 1" hydrogen heavy-duty truck, jointly developed by FTXT Energy and Great Wall Motor Commercial Vehicles, arrived in Brazil in August 2025, becoming the first hydrogen heavy-duty truck introduced to the country. This road test will accumulate key data for the commercial application of hydrogen fuel cell heavy-duty trucks in Brazil. The test will focus on the system efficiency, stability, and adaptability of the vehicles in Brazil's complex environments, and will collect data on how factors such as temperature, altitude, road surface types, and driving conditions affect the performance of the fuel cell system. Additionally, the test will verify the vehicles' adaptability to different hydrogen sources, including pathways such as electrolysis hydrogen and hydrogen from ethanol reforming, providing a reference for Brazil to build a localized hydrogen supply and vehicle application system. SENAI CIMATEC is an authoritative testing institution for light and heavy vehicles in Brazil, having participated in multiple national industrial projects such as the Brazil Mobility Program, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP), the Brazilian Electricity Regulatory Agency (ANEEL), and the Brazilian Industrial Innovation Enterprise Support Program, and has experience in vehicle testing and industrialisation projects. Recently, the institution, in partnership with HYTRON and Petrogal Brasil, inaugurated Brazil's first green hydrogen demonstration project in Camaçari, Bahia, covering aspects including solar power generation, water electrolysis for hydrogen production, hydrogen refueling station construction, and end-user vehicle applications. Previously, leveraging the market resources of Great Wall Motor Group in Brazil, FTXT Energy has signed memorandums of understanding with institutions including the University of São Paulo, the Brazilian Institute of Technology, the Itaipu Technological Park, JAQ under the Nautica Group, and SENAI CIMATEC, covering areas such as hydrogen fuel cell vehicle R&D, hydrogen refueling infrastructure construction, and technical exchanges. The launch of this road test marks a substantive advancement in the cooperation between FTXT Energy and its Brazilian industrial partners. In the future, the two parties will continue to explore areas such as hydrogen-powered ships and stationary power generation, promoting the expansion of hydrogen energy applications from vehicle demonstrations to a multi-scenario, full-chain ecosystem.