[SMM Steel Market Morning News] Ministry of Foreign Affairs: China's Countermeasures Against U.S. Fentanyl Remain Effective

★Macro★

01

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[Ministry of Foreign Affairs: China's Countermeasures Against U.S. Fentanyl Tariffs Remain Valid]

Lin Jian, spokesperson for the Ministry of Foreign Affairs, stated that China and the United States reached multiple positive consensus during their economic and trade talks in Geneva, agreeing to significantly reduce bilateral tariff levels. The U.S. committed to removing 91% of tariffs and suspending the implementation of 24% of reciprocal tariffs. Correspondingly, China also removed 91% of counter-tariffs and suspended the implementation of 24% of counter-tariffs, with both sides retaining 10% of tariffs each. The U.S. used fentanyl as a pretext to unreasonably impose two rounds of tariffs on China, to which China promptly responded with countermeasures including tariff and non-tariff actions, firmly safeguarding its legitimate rights and interests. These countermeasures remain valid.

02

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[Seven Departments: Launch Pilot Program for M&A Loans for Tech Firms in Select Commercial Banks and Pilot Cities, Increasing Loan-to-Transaction Ratio to 80% and Extending Loan Terms to 10 Years]

The Ministry of Science and Technology, the People's Bank of China, the National Financial Regulatory Administration, the China Securities Regulatory Commission, the National Development and Reform Commission (NDRC), the Ministry of Finance, and the State-owned Assets Supervision and Administration Commission of the State Council jointly issued the "Several Policy Measures to Accelerate the Construction of a Science and Technology Financial System to Strongly Support High-Level Scientific and Technological Self-Reliance and Strength," establishing a specialized mechanism for bank credit support for scientific and technological innovation. They formulated identification standards for science and technology-oriented enterprises supported by science and technology finance, established a recommendation mechanism for such enterprises, and facilitated precise and effective support from banking and insurance institutions. Commercial banks were encouraged to establish specialized science and technology finance institutions and set up science and technology branches in regions with dense scientific and technological resources. Banks with the necessary conditions were encouraged to explore internal performance evaluation schemes for longer-term scientific and technological innovation loans and establish a mechanism for exemption from liability for due diligence. A pilot program for M&A loans for technology firms was launched in select commercial banks and pilot cities, increasing the loan-to-transaction ratio to 80% and extending loan terms to 10 years.

03

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[China's Incremental Social Financing Scale Reaches 16.34 Trillion Yuan from January to April, 3.61 Trillion Yuan More Than the Same Period Last Year]

China's incremental social financing scale reached 16.34 trillion yuan from January to April, 3.61 trillion yuan more than the same period last year. The market estimate was 16.58 trillion yuan, and the figure for January to March was 15.18 trillion yuan. Specifically, RMB loans issued to the real economy increased by 9.78 trillion yuan, 339.7 billion yuan more YoY; foreign currency loans issued to the real economy, converted into RMB, decreased by 109.8 billion yuan, 231.1 billion yuan more reduction YoY; entrusted loans increased by 5.3 billion yuan, 95.9 billion yuan more YoY; trust loans increased by 45.4 billion yuan, 167.2 billion yuan less YoY; unaccepted bankers' acceptances increased by 250.6 billion yuan, 149.4 billion yuan more YoY; net corporate bond financing reached 759.1 billion yuan, 409.5 billion yuan less YoY; net government bond financing reached 4.85 trillion yuan, 3.58 trillion yuan more YoY; and domestic equity financing by non-financial enterprises reached 135.3 billion yuan, 40.4 billion yuan more YoY.

★Industry and Downstream Sectors★

01

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[SMM Beijing Construction Materials Inventory] Inventory declined steadily after the holiday, with moderate destocking performance

As of May 13, 2025, Beijing's construction materials inventory stood at 501,600 mt, a decrease of 25,800 mt compared to May 6, representing a 4.89% WoW decline. Overall, inventory declined steadily.

02

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[SMM Lecong HRC Inventory] The pace of destocking in Lecong slowed down but inventory continued to decline

This week, Lecong's HRC inventory was 66.11 mt, a decrease of 16,400 mt WoW, or 2.42%. On a YoY basis (solar calendar), it decreased by 301,300 mt, representing a 31.31% YoY decline.

03

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[SMM Shanghai HRC Inventory] Shanghai's inventory decreased slightly this week

This week, Shanghai's HRC inventory was 29.39 mt, a decrease of 0.86 mt WoW, or 2.84%. On a YoY basis (solar calendar), it decreased by 22.00%, and on a YoY basis (lunar calendar), it decreased by 24.60%.

04

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[SMM Hangzhou Construction Materials Inventory] Inventory decreased by 12.94% WoW

This week, Hangzhou's inventory was 740,000 mt, a decrease of 110,000 mt compared to last Wednesday, representing a 12.94% WoW decline.

05

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[SMM Xi'an Construction Materials Inventory] Increased stockpiling demand before the holiday accelerated the destocking speed

As of May 14, this week, Xi'an's total construction materials inventory was 454,000 mt, a decrease of 19,000 mt WoW, or 4.02%.

06

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[SMM Ningbo HRC Inventory] Ningbo's HRC destocking was good

This week, the large-sample inventory of Ningbo's HRC was 3.16 million mt, a decrease of 31,000 mt WoW, or 8.93%. On a YoY basis (solar calendar), it decreased by 9.43%.

07

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[SMM Blast Furnace Operating Rate] Increased maintenance of blast furnaces led to a slight decline in pig iron production

According to the SMM survey, on May 14, the operating rate of blast furnaces at 242 steel mills surveyed by SMM was 88.63%, a decrease of 0.33 percentage points WoW. The capacity utilisation rate of blast furnaces was 90.45%, a decrease of 0.65 percentage points WoW. The daily average pig iron production of the sampled steel mills was 2.4403 million mt, a decrease of 17,600 mt WoW.

During this period, 3 blast furnaces underwent maintenance, with no blast furnaces resuming production. The blast furnaces undergoing maintenance were mainly concentrated in Jiangsu, Jiangxi, and Wuhan regions. According to SMM's tracking, recent blast furnace maintenance was mostly for regular annual inspections, and pig iron production showed a downward trend. Looking ahead to the next period, 2 blast furnaces will undergo maintenance, with no blast furnaces resuming production. The blast furnaces resuming production will be concentrated in Shandong and Liaoning regions. Currently, except for a few steel mills, most steel mills still have profits, and their willingness to conduct voluntary maintenance is low. However, with relatively firm raw material prices, steel mill profits may be compressed in the later period. Coupled with the background of crude steel production reduction, pig iron production may continue to decline in the later period.

08

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[SMM Regional Inventory of Building Materials] Weak Demand Leads to No Inventory Drawdown

As of May 14, the total inventory of building materials in Guiyang this week was 51,300 mt, up 100 mt WoW, representing a WoW increase of 0.2%. Among this, the inventory of rebar was 30,500 mt, up 1,600 mt WoW, while the inventory of wire rod was 20,800 mt, down 1,500 mt WoW.

★Other Hot Topics★

⭕[US Logistics Executive Expects Surge in Sino-US Freight]

It was reported that during the 90-day window period agreed upon in the Sino-US economic and trade talks, US importers are eager for upstream suppliers to ship goods as soon as possible, anticipating an imminent surge in trade between China and the US. "I have clients in China who have pre-loaded thousands of containers, ready to ship at any moment," said Paul Brashier, Vice President of Global Supply Chain at ITS Logistics, as quoted by CNBC on the 12th. "We expect a surge in Sino-US freight in the next four to six weeks." Ryan Petersen, founder of Flexport, a US logistics and freight forwarding company, wrote on a social platform on the 13th, "On the first day of the joint statement release from the Sino-US economic and trade talks, our ocean freight bookings from China increased by 35%. A large number of previously backlogged orders are emerging rapidly, and shipping space will soon be fully booked. Prepare for a surge in ocean freight."

⭕[SAMR: Encourage Platform Enterprises to Launch More Practical Measures to Support the Development of Self-Employed Businesses Based on Their Own Characteristics]Bai Qingyuan, Deputy Director of the State Administration for Market Regulation (SAMR), presided over a symposium on platform enterprises supporting the development of self-employed businesses. He engaged in in-depth exchanges with representatives of self-employed businesses, platform enterprises, and financial institutions to understand the difficulties and challenges faced by self-employed businesses in their development and put forward suggestions and opinions on how platform enterprises can support their growth. The meeting pointed out that currently, the foundation for China's sustained economic rebound and improvement needs further consolidation, and self-employed businesses still face pressures and challenges in their survival and development. As an important part of the private economy, platform enterprises can provide broad space for the development of self-employed businesses and offer assistance and support in various aspects such as digital empowerment, traffic support, and market expansion. Platform enterprises are encouraged to launch more practical measures to support the development of self-employed businesses based on their own characteristics. At the meeting, representatives of self-employed businesses from Beijing, Shanghai, Zhejiang, Sichuan, and other places, as well as representatives from enterprises (institutions) such as the China (Yiwu) Research Center for the Development of Individual Economy, Xiaohongshu, Alipay, Douyin, Pinduoduo, and the Bank of China, made speeches. The meeting also reported on the construction and operation of the "National Network for the Development of Self-Employed Businesses."

⭕[Ministry of Commerce: Full-chain Control to Prevent Illegal Outflow of Strategic Minerals]

A spokesperson for the Ministry of Commerce responded to inquiries from reporters regarding the work on strengthening full-chain control over the export of strategic minerals. Question: We have noticed that the National Export Control Coordination Mechanism Office recently deployed work to strengthen full-chain control over the export of strategic minerals. What considerations are behind this full-chain control? What key tasks will be carried out subsequently?

Answer: The export control of strategic minerals is crucial to national security and development interests. To prevent the illegal outflow of strategic minerals, it is necessary to strengthen control over all links in the production and supply chain. On May 12, the National Export Control Coordination Mechanism Office held a special meeting in Changsha, Hunan Province, to comprehensively deploy work for 10 departments, including the Ministry of Commerce and the Ministry of Industry and Information Technology, as well as local authorities in seven provinces, including Inner Mongolia and Jiangxi.

To effectively prevent the illegal outflow of strategic minerals, control over strategic minerals must start from the source, strengthening full-chain control over mining, smelting, processing, transportation, manufacturing, sales, and export. All departments need to collaborate, implement rigorous daily supervision, and promptly identify risks and hidden dangers. Those who take reckless risks and commit offenses despite warnings should be investigated and punished one by one as they are discovered. Local authorities must fulfill their local regulatory responsibilities, comprehensively survey relevant business entities in their regions, grasp the production, operation, and flow of strategic minerals, guide local enterprises to enhance their awareness and capabilities of compliance, and ensure the effective implementation of strategic mineral control measures.

All departments believe that full-chain control over strategic minerals is of utmost importance. They will fulfill their regulatory and law enforcement responsibilities in accordance with their respective duties, continuously improve information traceability and normalized management mechanisms, ensure that control over all links is comprehensive, thorough, and without omissions, strictly punish illegal and non-compliant cases, and continuously strengthen the deterrent effect of supervision and law enforcement. Relevant local authorities will expedite the registration and ledger recording of enterprises related to strategic minerals in their regions and, through ongoing efforts such as promoting export control policies, issuing export risk alerts, and conducting supervision and inspections, ensure the effective implementation of control measures to safeguard national security and development interests.

⭕[China Securities Depository and Clearing Corporation Initiates Q1 Inspection of Abnormal Accounts, Focusing on Suspected Financing Activities]

China Securities Depository and Clearing Corporation (CSDC) recently initiated the inspection of abnormal accounts for the first quarter of 2025 to implement the real-name management regulations for securities accounts and prevent and combat the illegal and non-compliant use of securities accounts. It is reported that CSDC has distributed the preliminary screening results of suspected abnormal accounts for Q1 to various securities firms. Securities firms are required to conduct inspections of suspected abnormal accounts as usual and submit inspection reports and feedback forms on the inspection results to CSDC within the specified timeframe.

It should be noted that securities firms are required to provide detailed reports to China Securities Depository and Clearing Corporation Limited (ChinaClear) on their verification processes for suspected abnormal investor accounts. In addition to basic information such as the investor's name, account number, age, occupation, and capital scale, securities firms must verify whether the accounts under investigation are suspected of being involved in margin financing. Specifically, securities firms need to check whether the mobile phone numbers of the investors or their secondary contacts are associated with margin financing companies, and whether the accounts under investigation exhibit characteristics of suspected off-exchange margin financing, such as "large sums of capital being transferred out before changes to trading or bank-securities transfer passwords, followed by large sums of capital being transferred in after the changes," or "similar or proportional integer amounts being transferred in after each change to trading or bank-securities transfer passwords." Additionally, they need to verify whether there are characteristics of suspected off-exchange margin financing, such as "completely different entrusted mobile phone numbers, MAC addresses, and IP addresses being used before and after changes to trading or bank-securities transfer passwords."

On May 12, the new vehicle sales figures for April were released for Japan's three major automakers in China. Toyota's sales increased by 20.8% YoY to 142,800 units, marking the third consecutive month of YoY growth. Honda and Nissan, on the other hand, experienced YoY sales declines for the 15th and 13th consecutive months, respectively. Specifically, Honda's sales in China in April decreased by 40.8% YoY to 43,689 units, while Nissan's sales decreased by 15.7% YoY to 46,295 units.