[SMM Steel Market Morning News] Local government bond issuance has exceeded RMB 4 trillion, providing a "growth engine" for infrastructure investment

★Macro★

01

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PBOC: Social financing scale increased by 18.63 trillion yuan from January to May, 3.83 trillion yuan more than the same period last year

According to PBOC data, China's social financing scale increased by 18.63 trillion yuan from January to May, 3.83 trillion yuan more than the same period last year; it was 16.3429 trillion yuan from January to April. Specifically, RMB loans issued to the real economy increased by 10.38 trillion yuan, up 112.3 billion yuan YoY; foreign currency loans issued to the real economy, converted into RMB, decreased by 96.3 billion yuan, a larger decrease of 169 billion yuan YoY; entrusted loans decreased by 11.3 billion yuan, a smaller decrease of 80.2 billion yuan YoY; trust loans increased by 62.7 billion yuan, a smaller increase of 172.3 billion yuan YoY; unaccepted bankers' acceptances increased by 134.3 billion yuan, up 166.2 billion yuan YoY; net corporate bond financing was 908.7 billion yuan, down 288.4 billion yuan YoY; net government bond financing was 6.31 trillion yuan, up 3.81 trillion yuan YoY; and domestic equity financing by non-financial enterprises was 150.4 billion yuan, up 44.4 billion yuan YoY.

02

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PBOC: Broad money (M2) balance at month-end May was 325.78 trillion yuan, up 7.9% YoY

According to PBOC data, at month-end May, the broad money (M2) balance was 325.78 trillion yuan, up 7.9% YoY. The narrow money (M1) balance was 108.91 trillion yuan, up 2.3% YoY. The currency in circulation (M0) balance was 13.13 trillion yuan, up 12.1% YoY. A net cash injection of 306.4 billion yuan was made in the first five months.

03

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Israeli military confirms airstrikes on Iran's nuclear program

According to CCTV News, on local time June 13, the Israeli Air Force was conducting airstrikes on dozens of targets in Iran related to the nuclear program and other military facilities, naming the operation "Strength of the Lion." The Israeli military claimed that Iran possesses enough enriched uranium to produce multiple bombs within days, necessitating action to address this "imminent threat."

★Industries and Downstream Sectors★

01

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Guangzhou: Optimizes real estate policies, fully lifting purchase, resale, and price restrictions, and reducing down payment ratios and interest rates for loans

The "Implementation Plan for Special Actions to Boost Consumption in Guangzhou (Draft for Public Comment)" is open for public comment. It mentions the orderly reduction of consumption restrictions. Real estate policies will be optimized by fully lifting purchase, resale, and price restrictions, and reducing down payment ratios and interest rates for loans to better meet housing consumption needs. Solid progress will be made in the renovation of urban villages and old residential communities. In 2025, it is planned to commence renovations on over 150 old residential communities, replace over 9,000 old elevators in residential buildings, and achieve 100 billion yuan in fixed asset investment for urban village renovations. Efforts will be made to promote the use of special loans to purchase existing commercial housing for resettlement housing. Continuous optimization of the policies governing the use of housing provident funds will be carried out, supporting contributors in applying for personal housing loans from the housing provident fund while withdrawing funds from it to pay the down payment for home purchases, and further optimizing the policies and measures for withdrawing funds for renting.

02

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US Announces Tariff Hike on Steel Home Appliances Starting June 23, Including Washing Machines and Refrigerators

On June 12, it was learned that the US Department of Commerce announced that it would impose additional tariffs on a variety of steel household appliances starting June 23, including "steel derivatives" such as dishwashers, washing machines, and refrigerators. It is reported that the 50% tariff set for most countries will affect the import of these steel products, potentially leading to an increase in consumer prices. Industry stakeholders are closely monitoring the developments.

03

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GAC Group Commits to Ensuring Dealer Rebate Payout Within Two Months Starting Today

GAC Group issued a commitment announcement: As a crucial part of the automotive industry chain, the steady development of dealers is a key factor in ensuring user service and experience. GAC Group actively responded to the initiative of the China Automobile Dealers Association to promote the healthy development of the automotive industry. Along with its five major vehicle brands—GAC Hyptec, GAC Trumpchi, GAC Aion, GAC Honda, and GAC Toyota—it commits to ensuring that dealer rebate payouts will be completed within two months starting today, thereby promoting the high-quality development of the automotive industry.

04

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Trump Formally Approves Nippon Steel's $14.9 Billion Acquisition of US Steel

It is reported that US President Trump formally approved the transaction for Nippon Steel Corporation to acquire US Steel Corporation for $14.9 billion this Friday. Trump signed an executive order stating that if both parties sign an agreement with the US Treasury Department to address national security concerns in the transaction, the acquisition could proceed. Subsequently, the two companies announced that they had signed relevant agreements, meeting the requirements of the executive order, which means the transaction has been formally approved. It is introduced that the agreement includes a plan to invest $11 billion by 2028 and covers governance structure, capacity guarantees, and trade commitments. Both parties also noted that the US government will obtain a "golden share," but did not disclose further details. Reports indicate that this acquisition will inject critical investment into the struggling US Steel Corporation, while also giving Nippon Steel the opportunity to participate in numerous infrastructure projects in the US. At this time, its foreign competitors are facing steel tariffs as high as 50%. This approval also exempts Nippon Steel from paying a $565 million breakup fee if the transaction fails.

05

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Local government bond issuance exceeds RMB 4 trillion this year

As the pace of local government bond issuance has significantly accelerated since Q2. A review of the Special Bond Information Network by reporters revealed that as of June 12, local government bond issuance this year had exceeded RMB 4 trillion, with new special bonds accounting for nearly 40% of the total. Experts stated that fiscal policy will remain one of the key supports for economic resilience in Q2, and local government bond issuance is expected to increase further, driving steady growth in infrastructure investment throughout the year. There has been a notable increase in the issuance of new bonds allocated to major projects through local government bonds this year, primarily in the form of new special bonds. Data shows that among the RMB 4,483.4 billion in local government bonds issued so far, RMB 1,645.7 billion were new local government bonds, and RMB 359.6 billion were new general bonds.

★Other Hot Topics★

⭕[Eight Ministries Seek Public Comments on the "Guidelines for the Security of Automotive Data Exports (2025 Edition)"]Eight ministries, including the Ministry of Industry and Information Technology, are seeking public comments on the "Guidelines for the Security of Automotive Data Exports (2025 Edition)". Automotive data processors must declare a data export security assessment when providing automotive data overseas under any of the following circumstances: (1) providing important data overseas; (2) cumulatively providing personal information (excluding sensitive personal information) of over 1 million individuals overseas since January 1 of the current year; (3) cumulatively providing sensitive personal information of over 10,000 individuals overseas since January 1 of the current year; (4) operators of critical information infrastructure providing personal information overseas; (5) other circumstances requiring a data export security assessment as specified by relevant state regulations.

⭕[PBOC: RMB Loans Increased by RMB 10.68 Trillion in the First Five Months]PBOC data shows that new RMB loans in China increased by RMB 10.68 trillion in January-May, with an estimate of RMB 10.9597 trillion, compared to RMB 10.0597 trillion in January-April. By sector, household loans increased by RMB 572.4 billion, including a decrease of RMB 262.4 billion in short-term loans and an increase of RMB 834.7 billion in medium and long-term loans. Loans to enterprises (and institutions) increased by RMB 9.8 trillion, including an increase of RMB 3.14 trillion in short-term loans, RMB 6.16 trillion in medium and long-term loans, and RMB 364.5 billion in bill financing. Loans to non-banking financial institutions increased by RMB 135.7 billion. At the end of May, the outstanding balance of foreign currency loans was $539.4 billion, down 16.3% YoY. Foreign currency loans decreased by $2.7 billion in the first five months.

⭕[PBOC Achieves Net Injection of RMB 67.5 Billion Through Reverse Repo Operations Today, Net Withdrawal of RMB 72.7 Billion This Week]The PBOC conducted RMB 202.5 billion in 7-day reverse repo operations today. With RMB 135 billion in 7-day reverse repos maturing today, a net injection of RMB 67.5 billion was achieved. This week, the People's Bank of China (PBOC) conducted reverse repo operations worth 858.2 billion yuan. As reverse repos worth 930.9 billion yuan matured this week, a net withdrawal of 72.7 billion yuan was achieved.

⭕[China's imports and exports with the five Central Asian countries grew rapidly in the first five months of this year] According to customs statistics, China's imports and exports with the five Central Asian countries expanded from 312.04 billion yuan in 2013 to 674.15 billion yuan in 2024, marking a 116% increase, with an average annual growth rate of 7.3%, which was 2.3 percentage points higher than the average annual growth rate of China's overall imports and exports during the same period. In the first five months of this year, China's imports and exports with the five Central Asian countries reached 286.42 billion yuan, up 10.4% YoY (the same hereinafter), hitting a record high for the same period in history. Of this total, exports amounted to 188.18 billion yuan, up 5.6%, while imports reached 98.24 billion yuan, up 21%.