[SMM Steel Market Morning Briefing] The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Continuously Promoting the Urban Renewal Initiative"

★Macro★

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[The General Office of the CPC Central Committee and the General Office of the State Council Issue the "Opinions on Continuously Promoting Urban Renewal Actions"]

The General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Continuously Promoting Urban Renewal Actions." The main objectives are as follows: By 2030, significant progress will be made in the implementation of urban renewal actions, with continuous improvement in the institutional mechanisms for urban renewal. Initial results will be achieved in the transformation of urban development and construction methods, a more solid foundation for safe development, continuously enhanced service efficiency, significantly improved living environments, a richer economic landscape, effective protection of cultural heritage, more prominent urban characteristics, and cities becoming spaces for high-quality life for the people.

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[China Urges the US to Halt 232 Tariff Measures as Soon as Possible]

At the regular press conference of the Ministry of Commerce held today, the spokesperson stated that regarding the US's 232 tariffs on imported automobiles, steel, and aluminum, as well as the initiation of a 232 investigation into imported pharmaceuticals, China believes that the US's actions are typical unilateralist and protectionist moves. They not only harm the rights and interests of other countries and undermine the rules-based multilateral trading system but also do not benefit the development of the US's own industries. China urges the US to halt the 232 tariff measures as soon as possible and properly address the concerns of all parties through equal dialogue.

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The Supreme People's Court and the China Securities Regulatory Commission Jointly Issue the "Guiding Opinions on Strict and Fair Law Enforcement and Administration of Justice to Serve and Safeguard the High-Quality Development of the Capital Market"

The Supreme People's Court and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Strict and Fair Law Enforcement and Administration of Justice to Serve and Safeguard the High-Quality Development of the Capital Market." The main contents of the "Guiding Opinions" are as follows: First, focus on investor protection and stand firm on the people's stance. Combat fraudulent issuance and falsification of financial information disclosure in accordance with the law, and improve the civil liability system for false statements. Regularly carry out representative litigation for securities disputes to facilitate investors in safeguarding their legitimate rights and interests in accordance with the law and reduce the cost of investor rights protection. Second, regulate the behavior of market participants and shape a sound market ecosystem. Promote the return to fundamentals and steady operation of securities, futures, and fund management institutions. Improve the judicial rules for the multi-tiered capital market, support industry self-regulatory organizations in performing their duties in accordance with the law, safeguard the high-level institutional opening-up of the capital market, purify the capital market ecosystem, and prevent and defuse capital market risks. Third, strengthen the coordination between judicial and administrative authorities and build a synergistic force for development. Promote the improvement of a diversified dispute resolution mechanism and deepen the implementation of the approach of "addressing issues at the source and preventing problems before they occur." Strengthen the consultation and information-sharing mechanisms, ensure the connection between judicial procedures and administrative regulatory procedures, and comprehensively enhance the quality and efficiency of judicial trial and enforcement as well as administrative regulatory penalties. Fourth, we will improve organizational safeguards to effectively enhance judicial and regulatory capabilities. We will strengthen the construction of the financial judicial team, adhere to political guidance, and consistently make unremitting efforts to promote the building of a clean and honest government within the Party. We will optimize the jurisdiction and adjudication mechanisms for financial cases, strengthen the financial judicial mechanism and the two-way exchange and training mechanism, and continuously enhance the standardization and legalization of regulatory law enforcement.

★ Industry and Downstream Sectors ★

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[SMM Weekly HRC Balance] Production Declines Significantly, HRC Inventory Falls Slightly This Week

[SMM Weekly HRC Balance] Production Declines Significantly, HRC Inventory Falls Slightly This Week

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[SMM Inventory Data by Product Type at Ten Ports]

According to the SMM survey, as of May 15, the total inventory at the 10 ports surveyed by SMM was 105.47 million mt, up 2.03 million mt WoW. Currently, the output of pig iron from blast furnaces at steel mills is declining, and demand support is weakening, leading to an overall accumulation of inventory. Among them, the inventory buildup of fine ore is particularly noticeable.

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[SMM National Construction Steel Inventory Summary]

As of May 15, the total rebar inventory across China surveyed by SMM was 5.8283 million mt, down 315,100 mt WoW, a 5.13% decrease WoW and a 20.34% decrease YoY on the lunar calendar basis;

the total wire rod inventory was 1.2535 million mt, up 28,800 mt WoW, a 2.35% increase WoW and a 23.41% decrease YoY on the lunar calendar basis.

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[SMM Construction Material Inventory] Favourable Macro Front Acts as a "Catalyst", Construction Material Inventory Shifts from Increase to Decrease This Week

This week, the total inventory of construction steel has decreased. Specifically, the total rebar inventory decreased by 5.13% WoW, while the total wire rod inventory increased by 2.35% WoW. On the supply side, although three steel mills have blast furnace maintenance plans this week, the overall operating rate of blast furnaces remains at a relatively high level. EAF steel mills are currently experiencing production differentiation. In the southwest region, due to electricity subsidies, market profitability has recovered, and some electric furnace mills have increased their operating hours. In the south China region, due to rainy weather and difficulties in collecting steel scrap, overall profitability is poor, and some severely loss-making electric furnace mills have slightly reduced their operating hours. On the demand side, influenced by positive news from tariff and trade negotiations, macro sentiment has improved, and market speculative demand has recovered. This week, influenced by the adjustment of the production structure on the supply side and the warming of market demand, construction material inventory has shifted from an increase to a decrease.

This week, the total rebar inventory was 5.8283 million mt, down 315,100 mt WoW, a 5.13% decrease (previous value: 1.65%), and down 1.4886 million mt compared to the same period last year on the lunar calendar basis, a 20.34% decrease (previous value: -20.38%).

★Other Hot Topics★

⭕[Ministry of Commerce: All Parties Involved in CK Hutchison Holdings' Port Sale Transaction Must Not Evade Review]

A spokesperson for the Ministry of Commerce stated that since March this year, relevant departments have repeatedly issued statements emphasizing that the sale transaction of ports by CK Hutchison Holdings will be reviewed in accordance with the law to protect fair market competition and safeguard social and public interests. All parties involved in the transaction must not evade the review in any way, and must not implement concentration before obtaining approval; otherwise, they will bear legal responsibility. It is hoped that relevant enterprises will maintain a clear understanding of this and act prudently.

⭕[General Office of the CPC Central Committee and General Office of the State Council: Strengthen the Construction and Renovation of Urban Infrastructure, and Promote the Construction of New-Type Urban Infrastructure]The General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Continuously Promoting the Urban Renewal Initiative". Strengthen the construction and renovation of urban infrastructure. Conduct a comprehensive investigation into potential risks and hazards in urban infrastructure. Promote the coordinated development and comprehensive utilisation of underground space. Accelerate the construction and renovation of underground pipeline networks and underground utility tunnels for urban gas, water supply, drainage, sewage, and heating, and improve the long-term management system for construction, operation, and maintenance. Promote the upgrading of urban water supply facilities, strengthen the construction and renovation of facilities for the collection, treatment, and recycling of urban domestic sewage, as well as the treatment and disposal of sludge, and accelerate the establishment of an integrated construction, operation, and maintenance mechanism for sewage treatment plants and networks. Coordinate urban flood control and waterlogging management, establish and improve an operation and management model for the joint operation and coordination of urban water systems, drainage pipe networks, and surrounding rivers, lakes, seas, and reservoirs, accelerate the construction and renovation of drainage and waterlogging prevention facilities, build a comprehensive urban flood control and waterlogging drainage system, and enhance emergency response capabilities. Promote the upgrading and transformation of domestic waste treatment facilities. Strengthen the construction of public fire-fighting facilities and appropriately advance the construction of disaster prevention projects. Improve urban transportation infrastructure, develop fast arterial transportation, living-oriented distribution transportation, and green slow-moving transportation, and accelerate the construction of parking facilities. Optimize the planning and design of urban freight transportation networks, and improve the hierarchical distribution facility system. Promote the construction of new-type urban infrastructure, deepen the application of Building Information Modeling (BIM) technology, and implement the construction of urban infrastructure lifeline safety projects.

⭕[Supreme People's Court and China Securities Regulatory Commission: Criminal Liability Will Be Pursued in Accordance with the Law for Those Who Damage the Rights and Interests of Others Through "Short Essays" and Commit Crimes]

The Supreme People's Court and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Strictly and Fairly Enforcing the Law and Administering Justice to Serve and Guarantee the High-Quality Development of the Capital Market". The opinions mention that illegal activities such as fabricating and disseminating false information, "rights protection black industries", and unfair competition in the issuance and listing process that interfere with the normal operation of the market and disrupt the order of the capital market will be combated in accordance with the law to form a market ecosystem with integrity and a healthy atmosphere. For acts that disrupt market order and harm the rights and interests of others by fabricating and spreading false information such as "short essays," if the victims file civil lawsuits to claim damages, the people's courts shall support them in accordance with the law; if such acts constitute a crime, criminal liability shall be pursued in accordance with the law. For acts such as malicious proxy rights protection, "paid deletion of articles," and malicious initiation of lawsuits to block the review process for issuance and listing, targeting issuance applicants, publicly listed firms, and securities, futures, and fund management institutions, the people's courts shall support relevant entities in safeguarding their legitimate rights, such as the right to reputation, in accordance with the law, and support relevant administrative authorities in pursuing administrative violations, such as public security management and anti-unfair competition, in accordance with the law; if such acts constitute the crime of extortion or false litigation, criminal liability shall be pursued in accordance with the law. Judicial protection of the employment rights and fair treatment of "whistleblowers" in the capital market shall be strengthened.

⭕[Ministry of Commerce Responds to US Overuse of Export Control Measures to Restrict Huawei's Ascend Chips: Will Take Resolute Measures to Safeguard the Legitimate Rights and Interests of Chinese Enterprises]

A recent announcement by the Bureau of Industry and Security (BIS) under the US Department of Commerce indicates that the use of Huawei's Ascend chips anywhere in the world violates US export controls. He Yongqian, the spokesperson for the Ministry of Commerce, responded on May 15, stating that the US has overused export control measures, imposing stricter restrictions on Chinese chip products under baseless accusations, seriously harming the legitimate rights and interests of Chinese enterprises, seriously threatening the stability of the global semiconductor production and supply chain, and seriously undermining market rules and the international economic and trade order. This move by the US is not conducive to the long-term mutually beneficial and sustainable cooperation and development of enterprises from both sides. China urges the US to immediately correct its wrong practices and will take resolute measures to safeguard the legitimate rights and interests of Chinese enterprises.