高盛-中国材料观察-China Basic Materials Monitor September 2024 a very weak construction season09162024

17September2024

ChinaBasicMaterialsMonitor

September2024:averyweakconstructionseason

Averyweakconstructionseason:Downstreamproducerfeedbacksasofmid-Sepsuggestseasonalimprovement

mostly.Constructionactivitiesfurtherdeteriorated,counterthenormalseasonalpattern-withflatcementshipment,

andlowerordersandoperatingratesofaluminum

constructionsectionfabrication.Onthepositiveside,stategridandenergystoragerelateddemandcontinuetoprevail.Inventoryrestockingdeceleratedforcopper,drivenbylowerexpectationondemandoutlook,andsignsoftighterliquidityforsmall-mediummanufacturers.Oursurveysuggests

limitedprogressinfinishedgoodsinventorydestocking,

with25%ofmanufacturingproducersseeingexcessstock,versus30%inAugust.Ourhigh-frequencytrackerssuggestcurrentdemandis15%loweryoyforcementandlongsteel,0-4%lowerformetalsandflatsteel.Margins/pricingfor

_

aluminium,steelandcopperimproved,whilecement,coalandlithiumwasstable.

Channelchecks:Basedonproducerfeedbackinour

proprietarysurvey,theforwardorderbooktrendpickedup/remainedflatMoM–73%/31%ofrespondentssawMoMimprovementinSeptemberforthedownstreamsectors/basicmaterials.

Exhibit1:DownstreamorderbookMoMtrendpickedupinSeptember

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Jul-20

Aug-20

Sep-20

Oct-20

Nov-20

Dec-20

Jan-21

Feb-21

Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Oct-21

Nov-21

Dec-21

Jan-22

Feb-22

Mar-22

Apr-22

May-22

Jun-22

Jul-22

Aug-22

Sep-22

Oct-22

Nov-22

Dec-22

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

Jan-24

%ofrespondentsseeingimprovingMoMorderbook%ofrespondentsseeingdecliningMoMorderbookChinaPMI

Source:CEIC,GoldmanSachsGlobalInvestmentResearch(proprietarysurvey)

Exhibit2:Finishedgoodsinventoryishigherthannormal

Finishedgoodsinventoryvs.normallevel(net,%)

80%

60%

40%

20%

0%

Jan-20

Feb-20

Mar-20

Apr-20

May-20

Jun-20

Jul-20

Aug-20

Sep-20

Oct-20

Nov-20

Dec-20

Jan-21

Feb-21

Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Oct-21

Nov-21

Dec-21

Jan-22

Feb-22

Mar-22

Apr-22

May-22

Jun-22

Jul-22

Aug-22

Sep-22

Oct-22

Nov-22

Dec-22

Jan-23

Feb-23

Mar-23

Apr-23

May-23

Jun-23

Jul-23

Aug-23

Sep-23

Oct-23

Nov-23

Dec-23

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

-20%-40%-60%

AllrespondentsManufacturingrespondentsManufacturingrespondents(adjforsamplechanges)

Source:GoldmanSachsGlobalInvestmentResearch(proprietarysurvey)

TrinaChen

+852-2978-2678|trinaGoldmanSachs(Asia)

JoyZhang

+852-2978-6545|joy.xGoldmanSachs(Asia)

RoyShi

+852-2978-0110|roy.sGoldmanSachs(Asia)

JolinLiu

+852-3966-4087|jolin.GoldmanSachs(Asia)

FionaYe

+852-2978-0680|fionaGoldmanSachs(Asia)

GoldmanSachsdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefihaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingthinvestmentdecision.ForRegACcertificationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto/research/hedAnalystsemployedbynon-USaffiliatesarenotregistered/qualifiedasresearchanalystswithFINRAintheU.S.

GoldmanSachsChinaBasicM

TableofContents

_

ChinaBasicMaterials—coveragesummary3

Commoditypricedeck4

ChinaBasicMaterialsMonitor(September2024):averyweakconstructionseason5

Chinadownstreamdemandsnapshots9

Steel:theslowdowninproductionandexports13

Steel-makingrawmaterials:weakoutlookforbothIOanddomesticmetcoal15

Coal:softnon-powerdemand18

Cement:averyweakSeptembersofar21

Aluminum/Alumina:furtherweaknessinconstructionsection24

Copper:positivemomentumofpowergrid,deceleratedrestockingbyothers26

Lithium:pickupinESS29

Paperpackaging:mutedseasonalpickup32

Targetpricemethodologiesandrisks35

DisclosureAppendix40

17September2024

GoldmanSachsChinaBasicM

ChinaBasicMaterials—coveragesummary

Exhibit3:ChinaBasicMaterials–coveragesummary

_

CompanyTicker

Priceasof16-Sep-2024

Steel

Angang-H0347.HK

Angang-A000898.SZBaosteel600019.SSMaanshan-H0323.HK

Maanshan-A600808.SSCoal

Shenhua-H1088.HK

Shenhua-A601088.SSChinacoal-H1898.HK

Chinacoal-A601898.SSYankuang-H1171.HK

Yankuang-A600188.SSCement

Conch-H0914.HK

Conch-A600585.SSBBMG-H2009.HK

BBMG-A601992.SSCNBM3323.HK

CRC1313.HKWCC2233.HKBasemetals

Chalco-H2600.HK

Chalco-A601600.SSHongqiao1378.HK

JXC-H0358.HK

JXC-A600362.SSMMG1208.HK

CMOC-H3993.HK

CMOC-A603993.SSZijin-H2899.HK

Zijin-A601899.SSZhaojin1818.HK

Lithium

Ganfeng-H1772.HK

Ganfeng-A002460.SZTianqi-H9696.HK

Tianqi-A002466.SZYahua002497.SZYongxing002756.SZQHSaltLake000792.SZ

HuayouGEM

603799.SS002340.SZ

Paper

2314.HK

2689.HK

1812.HK

000488.SZ600567.SS002078.SZ

Lee&ManNDPaper

Chenming-HChenming-AShanying

Sunpaper

PriceTccy

1.051.845.580.891.81

30.4037.85 8.3012.738.9012.80

17.4420.08 0.56 1.34 2.09 1.450.89

4.676.3210.1012.4018.592.155.676.5314.7414.6812.96

15.8025.5819.7425.82 8.3632.3614.7321.645.55

2.042.871.443.271.3911.65

TargetTccy

1.101.507.900.600.70

28.0032.00 8.6010.608.0010.30

16.0016.500.90 1.502.00 1.101.40

4.40 5.70 9.6019.5026.00 3.40 8.5010.7021.5024.5015.50

19.0024.0019.0024.00 8.9032.0012.5021.406.30

2.203.50 1.602.30 1.5010.50

Tradingccy

HKDCNYCNYHKDCNY

HKDCNYHKDCNYHKDCNY

HKDCNYHKDCNYHKDHKDHKD

HKDCNYHKDHKDCNYHKDHKDCNYHKDCNYHKD

HKDCNYHKDCNYCNYCNYCNYCNYCNY

HKDHKDHKDCNYCNYCNY

Rating

NeutralSellBuySellSell

NeutralNeutralNeutralNeutral SellSell

Neutral Sell BuyNeutralNeutral SellBuy

SellSellSellBuyBuyBuyBuyBuyBuy*Buy*Buy

Neutral Sell Sell SellNeutral Sell Sell SellNeutral

SellNeutral Sell SellNeutralSell

Upside%

5%-18%42%-33%-61%

-8%-15% 4%-17%-10%-20%

-8%-18%61%12% -4%-24%57%

-6%-10% -5%57%40%58%50%64%46%67%20%

20% -6% -4% -7% 6% -1%-15% -1%14%

8%22%11%-30% 8%-10%

MktcapUS$bn

1.32.417.40.92.0

77.5106.0 14.123.8 11.217.7

11.915.0 0.82.02.3 1.30.6

10.315.312.35.59.12.915.719.950.054.75.4

4.17.34.26.0 1.42.511.35.24.0

1.11.70.50.50.94.6

EPS(rptccy/sh)

23A

(0.346)(0.346)0.550(0.172)(0.172)

3.2533.2531.5221.5221.8381.838

2.0172.0170.0020.0020.4580.0920.077

0.3910.3911.2101.9481.9480.0010.3820.3820.8040.8040.210

2.4742.4744.4404.4400.0356.3301.4572.0500.182

0.2440.182(0.433)(0.433)0.0351.104

24E

(0.619)(0.619)0.559(0.251)(0.251)

3.2643.2641.4421.4421.3771.377

1.4101.410(0.029)(0.029)0.0400.0640.144

0.6340.6341.8432.0002.0000.0240.7200.7201.3261.3260.600

0.1550.155(2.621)(2.621)0.2431.8890.8261.3970.212

0.3610.300(0.085)(0.085)0.0501.159

25E

(0.127)(0.127)0.911(0.132)(0.132)

3.3093.3091.4311.4311.3901.390

1.5621.5620.0300.0300.4890.0900.256

0.3510.3511.2583.3873.3870.1101.1021.1021.9161.9160.627

0.8470.8471.3711.3710.4501.5510.7921.0050.164

0.3700.316(0.211)(0.211)0.0451.104

PE

24E

n.a.n.a.10.0n.a.n.a.

8.511.65.2 8.85.99.3

11.314.2n.a.n.a.47.220.55.6

6.710.05.05.69.311.37.29.110.111.119.7

92.7164.8 n.a. n.a.34.517.117.815.526.2

5.614.3n.a.n.a.n.a.10.1

25E

n.a.5.06.1n.a.n.a.

8.411.45.38.95.89.2

10.212.917.145.0 3.914.73.2

12.118.07.33.35.52.54.75.97.07.718.8

17.030.213.118.818.620.918.621.533.9

5.5

8.7

n.a.

n.a.

n.a.

10.6

PE-cons

24E25EA

n.a.n.a.n.a.n.a.11.19.9n.a.n.a.n.a.n.a.

9.29.412.712.75.45.48.98.54.85.07.06.7

8.58.311.610.510.49.846.225.8 6.74.510.07.34.12.7

6.26.3 9.39.7 5.04.8 5.25.2 8.78.614.54.6 9.37.912.210.511.69.512.710.329.319.4

11.97.618.011.1n.a.7.4n.a.12.513.29.712.611.314.412.611.89.119.915.0

6.25.57.37.3n.a.n.a.n.a.n.a.11.87.19.28.1

23A

-6%

-6%

6%

-5%

-5%

16%16%15%15%20%20%

6%6%0%0%4%1%3%

12%12%13%10%10% 0%15%15%22%22%4%

11%11%14%14% 0%27%28%11%5%

4%2%-9%-9% 1%13%

ROEPB

24E25E24E25E

-11%-2%0.2

-11%-2%0.4

6%9%0.6

-7%-4%0.2

-7%-4%0.5

15%15%1.3

15%15%1.7

13%12%0.6

13%12%1.1

15%15%0.9

15%15%1.4

4%4%0.4

4%4%0.6

0%0%0.1

0%0%0.2

0%4%0.2

1%1%0.2

6%10%0.3

17%8%1.0

17%8%1.6

18%11%0.8

10%15%0.5

10%15%0.9

9%32%0.9

24%30%1.6

24%30%2.0

28%32%2.6

28%32%2.8

10%9%1.8

1%4%0.6 1%4%1.1-9%5%0.6-9%5%0.93%5%0.98%7%1.413%11%2.27%5%1.16%4%1.5

6%6%0.32%2%0.3-6%-9%0.2-6%-9%0.62%1%0.412%10%1.1

0.20.40.50.30.6

1.21.70.61.00.81.3

0.40.60.10.20.10.20.3

1.01.50.80.50.80.71.31.62.02.21.7

0.61.10.60.80.91.42.01.01.4

0.30.30.20.60.41.1

EV/EBITDA

23A24E

n.a.n.a.n.a.n.a.5.04.8n.a.21.2n.a.25.7

3.74.74.96.42.33.03.34.65.25.36.46.4

4.03.15.54.416.815.618.916.78.810.210.08.36.05.3

5.74.97.06.04.53.44.53.46.54.86.44.97.24.38.95.110.88.311.48.917.911.3

27.016.535.723.3 2.26.0 3.37.9n.a.12.1 5.37.3 9.110.614.79.915.612.5

10.38.010.17.822.512.726.714.822.320.67.76.9

25E

6.0 8.93.512.315.0

4.56.22.94.55.16.2

3.24.615.316.38.77.93.5

7.08.64.62.43.51.93.03.66.36.810.2

12.417.45.37.17.18.611.011.412.7

8.0 7.815.718.420.16.9

FCF24E

-54%-29% -1%-25%-15%

9%7%12%8%6%5%

3% 2% -5% -4%-10%-29%-8%

14%11%18%-1%-1%11%8%6%5%4%-7%

-9%-5%12%8%-5%5%4%-2%-5%

-5%2%30%18%7%7%

yieldDivyield

25E23A24E25E

14%0.0%0.0%0.0%

7%0.0%0.0%0.0%

16%5.0%5.0%8.2%

2%0.0%0.0%0.0%

1%0.0%0.0%0.0%

10%10.2%8.3%8.4%

8%7.7%6.0%6.1%

13%10.0%7.1%7.0%

9%6.4%4.2%4.2%

15%11.6%10.6%10.7%

12%7.2%6.7%6.8%

-1%4.9%4.6%5.1% 0%3.9%3.6%4.0%-14%3.1%9.8%9.8%-10%1.1%3.7%3.7% 1%5.0%1.1%12.9% -9%1.5%2.2%3.1%34%3.0%5.3%9.4%

8%2.5%3.3%2.2%

6%1.6%2.2%1.5%

15%8.7%9.6%6.5%

17%5.4%5.5%9.2%

11%3.2%3.3%5.6%

34%0.0%0.0%0.0%

14%3.7%7.0%10.7%

11%2.7%5.5%8.4%

8%2.4%3.3%4.8%

8%2.2%3.0%4.4%

1%0.4%1.0%1.0%

-3%1.9%0.0%0.6%-2%1.4%0.0%0.3%9%3.0%0.0%2.3%6%2.0%0.0%1.6%2%0.2%0.3%0.5%3%5.4%3.0%2.5%1%0.0%0.0%0.5%-8%2.9%1.3%0.9%4%1.2%0.8%0.6%

-3%3.1%6.2%6.4%2%1.0%1.6%1.6%14%0.0%0.0%0.0%8%0.0%0.0%0.0%-4%0.5%0.7%0.7%7%2.6%2.7%2.6%

Per1

-9

-13%-9%

-14

-6%

-10%-7%-7

-6%

-13%-12%

-2

-11%

0

0%-12%-12%-16%

5% -5% -2% -8% -9% -5%-11%-12% -7%-7%

-1

-7%-3%-2%-3

-2%2

6%-2%-4

-9% -2%-11% -8% -3%-6%

Source:Companydata,Datastream,GoldmanSachsGlobalInvestmentResearch,Note:Targetpricesarebasedona12-monthtimeframe,*denotesstockisontheAPACConvictionList

PricesinthisreportareasofSep16,2024,unlessstatedotherwise.“Target”inExhibits3,41,48,55,68,75andto12-monthtargetprices.TheauthorswouldliketothankArthurDengforhiscontributionstothereport.

17September2024

GoldmanSachsChinaBasicM

Commoditypricedeck

Exhibit4:Benchmarkcommoditypriceforecasts–globalandChina

SpotpricesupdatedasofSeptember13,2024

_

BASEMETALS

US$/lb

%

US$/lb

%

US$/lb

%

US$/t

%

US$/oz

%

Al-LME

yoy

Cu-LME

yoy

Nickel-LME

yoy

Alumina

yoy

Gold

yoy

BULKandENERGYCOMMODITIES

Oil-Brent

yoy

IOfines-ChinaCIF

yoy

HCC(Spot-FOBAustralia)

yoy

Thermalcoal-NEWC6000

yoy

CHINAPRICES

Steel-HRC

yoy

Steel-CRC

yoy

Steel-rebar

yoy

Al-SHFE

yoy

Cu-SHFE

yoy

ChinaAlumina

yoy

Licarbonate-CNspot

yoy

Lihydroxide-coarse,CNspot

yoy

Lihydroxide-fine,CIFAsia

yoy

Spodumeneprice6%-CNCIF

yoy

Thermal(QHD5500-blended)

yoy

Thermal(QHD5500-spot)

yoy

HebeiHCC(exVAT)

yoy

US$/bbl

%

US$/dmt

%

US$/t

%

US$/t

%

Rmb/t

%

Rmb/t

%

Rmb/t

%

US$/lb

%

US$/lb

%

Rmb/t

%

US$/t

%

US$/t

%

US$/t

%

US$/t

%

Rmb/t

%

Rmb/t

%

US$/t

%

2010A

0.99

31%

3.42

46%

8.54

28%

327

47%

1,224

26%

80

29%

148

83%

191

11%

99

37%

4,318

15%

5,618

18%

4,124

14%

0.86

10%

3.39

43%

2,795

17%

5,066

-3%

5,021

-1%

6,796

-8%

n.a.

n.a.

747

25%

747

25%

183

20%

2011A

1.09

10%

4.02

18%

10.31

21%

389

19%

1,572

28%

111

39%

170

15%

289

51%

122

23%

4,720

9%

5,464

-3%

4,704

14%

1.01

18%

3.98

17%

2,850

2%

5,152

2%

5,300

6%

6,990

3%

n.a.

n.a.

236

-68%

236

-68%

215

18%

2012A

0.92

-16%

3.63

-10%

7.97

-23%

323

-17%

1,672

6%

112

1%

130

-23%

191

-34%

99

-19%

4,119

-13%

4,893

-10%

3,961

-16%

0.97

-4%

3.53

-11%

2,629

-8%

5,419

5%

5,589

5%

7,638

9%

310

n.a.

246

4%

246

4%

200

-7%

2013A

0.86

-7%

3.33

-8%

6.87

-14%

330

2%

1,417

-15%

109

-3%

136

4%

148

-22%

86

-13%

3,779

-8%

4,625

-5%

3,556

-10%

0.92

-5%

3.36

-5%

2,521

-4%

5,528

2%

5,926

6%

8,090

6%

400

29%

269

10%

269

10%

169

-15%

2014A

0.86

0%

3.11

-6%

7.68

12%

331

0%

1,266

-11%

99

-9%

96

-29%

115

-23%

71

-18%

3,359

-11%

4,061

-12%

3,051

-14%

0.86

-7%

3.09

-8%

2,468

-2%

5,309

-4%

5,832

-2%

7,635

-6%

390

-3%

359

33%

359

33%

128

-24%

2015A

0.76

-12%

2.51

-19%

5.40

-30%

302

-9%

1,160

-8%

52

-48%

56

-42%

88

-23%

59

-17%

2,312

-31%

2,919

-28%

2,139

-30%

0.76

-12%

2.53

-18%

2,299

-7%

7,216

36%

6,743

16%

8,031

5%

420

8%

424

18%

424

18%

103

-20%

2016A

0.73

-4%

2.20

-12%

4.35

-19%

252

-17%

1,247

7%

44

-14%

58

4%

142

62%

66

11%

2,820

22%

3,414

17%

2,408

13%

0.72

-5%

2.24

-12%

2,041

-11%

18,118

151%

19,350

187%

14,554

81%

500

19%

437

3%

473

11%

112

9%

2017A

0.89

23%

2.90

32%

4.58

5%

299

19%

1,261

1%

52

17%

71

22%

189

33%

87

32%

3,696

31%

4,390

29%

3,605

50%

0.83

16%

2.81

26%

2,903

42%

17,840

-2%

18,893

-2%

19,063

31%

770

54%

501

15%

640

35%

177

58%

2018A

0.96

7%

2.96

2%

5.95

30%

472

58%

1,269

1%

72

38%

69

-2%

208

10%

107

24%

4,182

13%

4,608

5%

4,124

14%

0.85

2%

3.00

7%

2,992

3%

15,183

-15%

17,883

-5%

19,521

2%

901

17%

590

18%

654

2%

196

11%

2019A

0.81

-15%

2.72

-8%

6.31

6%

334

-29%

1,393

10%

64

-11%

92

33%

177

-15%

78

-28%

3,856

-8%

4,262

-8%

3,885

-6%

0.80

-6%

2.75

-8%

2,711

-9%

8,796

-42%

10,557

-41%

14,035

-28%

635

-30%

573

-3%

588

-10%

195

0%

2020A

0.77

-5%

2.79

2%

6.25

-1%

270

-19%

1,771

27%

43

-33%

108

17%

125

-30%

61

-22%

3,898

1%

4,461

5%

3,718

-4%

0.82

3%

2.83

3%

2,347

-13%

5,656

-36%

6,652

-37%

10,431

-26%

431

-32%

557

-3%

569

-3%

183

-6%

2021A

1.12

45%

4.21

51%

8.37

34%

328

21%

1,799

2%

71

64%

159

47%

224

79%

138

128%

5,420

39%

6,018

35%

5,042

36%

1.17

42%

4.22

49%

2,825

20%

16,641

194%

15,634

135%

14,667

41%

909

111%

825

48%

872

53%

308

68%

2022A

1.22

9%

4.00

-5%

11.80

41%

362

10%

1,803

0%

99

40%

120

-25%

358

60%

359

160%

4,503

-17%

4,982

-17%

4,417

-12%

1.20

2%

4.03

-5%

2,928

4%

63,275

280%

61,487

293%

50,892

247%

4,344

378%

791

-4%

1,271

46%

333

8%

2023A

1.02

-17%

3.85

-4%

9.74

-17%

344

-5%

1,943

8%

82

-17%

119

-1%

295

-18%

174

-52%

4,086

-9%

4,664

-6%

3,928

-11%

1.06

-12%

3.86

-4%

2,940

0%

32,620

-48%

33,368

-46%

47,932

-6%

3,623

-17%

763

-3%

966

-24%

273

-18%

2024E

1.08

6%

4.15

8%

7.59

-22%

421

22%

2,330

0%

84

2%

110

-7%

269

-9%

131

-25%

3,901

-5%

4,431

-5%

3,645

-7%

1.09

3%

4.17

8%

3,631

23%

11,112

-66%

10,538

-68%

13,865

-71%

930

-74%

738

-3%

895

-7%

257

-6%

2025E

1.29

20%

4.58

10%

7.03

-7%

403

-4%

2,686

15%

82

-2%

95

-14%

240

-11%

121

0%

3,953

1%

4,482

1%

3,447

-5%

1.00

-8%

4.59

10%

3,237

-11%

11,000

-1%

11,000

4%

11,000

-21%

800

-14%

744

1%

950

6%

243

-6%

2026E

1.47

14%

4.54

-1%

7.03

0%

404

0%

1,900

-29%

81

0%

95

0%

248

3%

107

0%

3,969

0%

4,498

0%

3,462

0%

1.00

0%

4.55

-1%

3,237

0%

11,000

0%

11,000

0%

11,000

0%

800

0%

744

0%

950

0%

247

2%

Source:Bloomberg,GoldmanSachsGlobalInvestmentResearch

17September2024

GoldmanSachsChinaBasicM

ChinaBasicMaterialsMonitor(September2024):averyweakconstructionseason

OurmonthlyChinaBasicMaterialsMonitorincorporatesourproprietarysurveyofover50industrycontactstotraforwardorderbooktrends;and2)inventorylevelsatproducersandend-users.Thesurveyincludesaggregatedcofromproducersandmanufacturersindownstreamsectorssuchasauto,appliances,machineryandpropertydevewellassteelmills,cementproducers,metalfabricators,containerboardproducersandboxmakers,andindustryassociations.

Downstreamproducerfeedbacksasofmid-Sep

suggestseasonalimprovementmostly

Feedbackfromend-user

forwardorderbooksasof

mid-Sep2024suggeststhat73%ofrespondentsexpectaMoMimprovementinSep,

_

versus44%inAugust.

Downstreamproducerfeedbackasofmid-Sepsuggestseasonalimprovementmostly.Constructionactivitiesfurtdeteriorated,counterthenormalseasonalpattern-withflatcementshipment,andlowerordersandoperatingrataluminumconstructionsectionfabrication.Onthepositiveside,stategridandenergystoragerelateddemandcoprevail.Inventoryrestockingdeceleratedforcopper,drivenbylowerexpectationondemandoutlook,andsignsofliquidityforsmall-mediummanufacturers.Oursurveysuggestslimitedprogressinfinishedgoodsinventorydesto25%ofmanufacturingproducersseeingexcessstock,versus30%inAugust.Ourhigh-frequencytrackerssuggesdemandis15%loweryoyforcementandlongsteel,0-4%lowerformetalsandflatsteel.Margins/pricingforalusteelandcopperimproved,whilecement,coalandlithiumwasstable.

Channelchecks–forwardorderbooktrends

Feedbackfromproducersasofmid-September2024suggeststhattheend-userorderbookpickedup,withtheMsittingathistoricalnormalrange.

nRealizedsalestrendsinAugust2024weremostlyinlineversusproducers’expectations,exceptautoaboveex

nTheMoMend-userforwardorderbooktrendpickedup,with73%ofrespondentsexpectingaMoMimprovemSeptemberversus44%inAugust2024,and13%ofrespondentsexpectingaMoMdeclineinSeptember,verAugust2024.

nTheorderbooktrendforbasicmaterialssoftened,with31%ofrespondentsexpectingaMoMimprovementinorderbooksinSeptember(versus46%inAugust),and31%expectingadecline(versus30%inAugust).Specpercentageofrespondentsexpectingorderbookimprovementwasnilforcoal(versus25%inAugust),25%fo(versusnilinAugust),13%forbuildingmaterials(versus25%inAugust),70%forbasemetalfabricatorsandt(versus91%inAugust),and33%forcontainerboardpaper(versus67%inAugust).

nAcrossallrespondents,4%areseeingMoMtrendsthatarestrongerthannormalseasonalpatterns,35%seeseasonalpatterns,and60%MoMtrendsthatareweakerthannormalseasonality(mostlyinsteel,metals,buimaterials,machinery,paper,andauto).

17September2024

GoldmanSachsChinaBasicM

Ourinventorysurveyasof

mid-Septembersuggestsabovenormallevelsfor

steel/Al/building

materials/finishedproducts,atnormallevelforironore/metcoal/coal/paper,belownormalforalumina/copper/OCC.

Channelchecks–inventorylevelsatproducersandend-users

Ourinventorychecksincludebothrawmaterialsandend-productinventoryheldatproducersthroughthevaluech(excludingexchangeandsocialinventory).Feedbackiscenteredontherelativepositionofthecurrentinventoryvnormallevels(seasonallyadjusted),andthedirectionofinventorychangesatthetimeofthesurvey.Ourinventorofmid-Septembersuggestsabovenormallevelsforsteel/Al/buildingmaterials/finishedproducts,atnormallevelfore/metcoal/coal/paper,belownormalforalumina/copper/OCC.

nInventoryforfinishedsteelisabovenormallevels(net7%ofrespondentsareseeingabove-normalinventory)movingdown;ironoreandcokingcoalareatnormallevelsandstable.

nInventoryforaluminumisabovenormallevels(net10%ofrespondentsareseeingabove-normalinventory)anInventoryforaluminaisbelownormallevels(net100%ofrespondentsareseeingbelow-normalinventory)an

nInventoryforcopperisbelownormallevels(net17%ofrespondentsareseeingbelow-normalinventory)anddown.

nInventoryforbuildingmaterialsisabovenormallevels(net14%ofrespondentsareseeingabove-normalinvenstable.

nInventoryforcontainerboardisatnormallevelsandmovingup.Inventoryforoldcorrugatedcontainers(OCC)normallevels(net33%ofrespondentsareseeingbelow-normalinventory)andstable.

nInventoryforcoalisatnormallevelsandmovingdown.

nInventoryforoveralldownstreamproductsisabovenormallevels(net31%ofrespondentsareseeingabove-ninventory)andmovingdown.

_

17September2024

GoldmanSachsChinaBasicM

Exhibit5:Channelchecks–downstreamsectors’orderbooktrendExhibit6:Channelchecks–basicmaterialsorderbooktrend

22%

10%

40%

78%

JanFeb2022A

70%

36%

10%

55%

MarApr2023A

38%

29%

38%

57%

MayJun2024A

44%

6%

38%

69%

JulAug2022A

73%

13%

SepOct2023A

NovDec2024A

71%

38%

34%

35%

9%

0%

23%

24%

31%

27%

41%

97%

May

Apr2023A

Jun2024A

JanFebMar

2022A

42%

46%

31%

25%

31%

30%

JulAugSepOctNovDec

2022A2023A2024A

Source:Companydata,GoldmanSachsGlobalInvestmentResearchSource:Companydata,GoldmanSachsGlobalInvestmentResearch

Exhibit7:Channelchecks–steelorderbooktrendExhibit8:Channelchecks–buildingmaterialsorderbooktrend

75%

50%

25%

25%

0%

0%

0%0%

0%

0%

13%

13%

25%

25%

38%

38%

_

100%

89%

JanFebMarAprMayJunJulAugSepOctNovDec2022A2023A2024A2022A2023A2024A

86%83%

63%

50%

25%

13%

13%

0%0%

14%17%13%13%

25%

38%

38%

75%

100%

JanFebMarAprMayJunJulAugSepOctNovDec2022A2023A2024A2022A2023A2024A

Source:Companydata,GoldmanSachsGlobalInvestmentResearch