Since the beginning of this year, downward pressure on China’s economy has continued to intensify, and demand in the steel market has remained weak, with prices falling steadily. Although there was a slight rebound in late July, the overall trend is unlikely to change. As a result, the metallurgical mining industry has also faced unprecedented difficulties, with economic performance continuing to decline sharply and operational risks steadily increasing.

I. Production Status of the Iron and Steel Industry

According to data from the National Bureau of Statistics, in July, China’s crude steel production reached 57.325 million tons, down 4.8% year-on-year and 2.9% month-on-month compared to June. From January to July cumulatively, crude steel production totaled 414.265 million tons, a decrease of 2.8% year-on-year.

In July, crude steel production reached 65.836 million tons, down 4.6% year-on-year and 4.5% month-on-month compared to June. From January to July, cumulative crude steel production totaled 476.042 million tons, a decrease of 1.8% year-on-year.

In July, steel production reached 92.302 million tons, down 1.9% year-on-year and 6.2% month-on-month compared to June. From January to July, cumulative steel production totaled 650.91 million tons, up 1.5% year-on-year.

II. National Iron Ore Production Situation

According to data from the National Bureau of Statistics, in July, the country’s production of iron ore totaled 126.19 million tons, down 7.5% year-on-year and 1.8% month-on-month compared to June. From January to July, iron ore production reached 760.985 million tons, a decrease of 10.1% year-on-year.

III. Iron Ore Import Situation

According to data from the General Administration of Customs, iron ore imports in July totaled 86.0982 million tons, an increase of 4.3% year-on-year. Of this total: 56.2403 million tons were imported from Australia, up 11.6% year-on-year and accounting for 65.3% of total imports; 16.5913 million tons were imported from Brazil, up 17.5% year-on-year and accounting for 19.3% of total imports. Compared with June, imports increased by 4.33%. The concentration of iron ore imports among a few countries continues to rise, with imports from Australia and Brazil alone accounting for as much as 84.6%.

IV. Port Inventory of Iron Ore

At the end of July, the nationwide port inventory of imported iron ore stood at 80.68 million tons, an increase of 1.97 million tons from the previous month, representing a growth rate of 2.50%. Compared with the same period last year, the inventory declined by 32.77 million tons, a drop of 28.9%. The port inventory of imported iron ore has now fallen to its lowest level since December 2013.

V. Supply and Demand of Iron Ore

At the end of July, the trend of oversupply in the iron ore market continued, though the magnitude of the surplus narrowed year-on-year. The apparent supply of iron ore (converted into finished ore) reached 756 million tons. Based on statistics on pig iron production, the demand for finished iron ore was 684 million tons, down 2.8% year-on-year. Domestically, the supply of iron ore exceeded demand by 72.8 million tons, a decrease of 7% compared to the previous year.

VI. Iron Ore Price Situation

In July, the price of domestically produced iron ore concentrate (62%) initially declined and then rebounded. The average ex-tax price for the month was 530.21 yuan per ton, down 22.03 yuan per ton from the previous month, representing a decrease of 3.99%. Specifically: From July 1 to July 15, the price fell from 544.34 yuan per ton to 521.89 yuan per ton, a drop of 4.12%; from July 15 to July 31, the price rebounded from 521.89 yuan per ton to 530.82 yuan per ton, an increase of 1.71%.

The price of imported fines has experienced relatively large fluctuations. The average landed price for the entire month was US$51.62 per ton, down by US$10.09 per ton from the previous month’s average, representing a decline of 16.35%. Specifically: From July 1 to 8, the price plummeted rapidly from US$59.19 per ton to US$45.13 per ton, a drop of 23.75%, reaching a new low for the year; from July 8 to the end of the month, the price fluctuated upward from US$45.13 per ton to US$54.04 per ton, an increase of 19.74%.

VII. Fixed-asset investment in the black metal mining and beneficiation industry

Affected by the decline in iron ore prices and intensifying international competition, the scale of investment in China’s ferrous metal mining and beneficiation industry has continued to fall sharply. According to data from the National Bureau of Statistics, from January to July, fixed-asset investment in the ferrous metal mining and beneficiation industry totaled 77.69 billion yuan, a year-on-year decrease of 16.8%. This represents the largest decline among all mining sectors that have released data, 10.3 percentage points higher than the overall decline rate of 6.5% for fixed-asset investment in the mining industry. Since September 2014, the year-on-year decline in fixed-asset investment has been steadily widening. From January to July, private fixed-asset investment in the ferrous metal mining and beneficiation industry reached 67.4 billion yuan, down 17.8% year-on-year.

VIII. Key Financial Indicators for the Black Metal Mining and Processing Industry, January–July

According to data from the National Bureau of Statistics, from January to July, the black metal mining and beneficiation industry reported operating revenue of 417.87 billion yuan, a year-on-year decrease of 19.6%. Among the industrial sectors tracked by the National Bureau of Statistics, this decline was second only to that of the oil and natural gas extraction industry, placing it in second place overall. Total profits reached 22.86 billion yuan, down 45.4% year-on-year; the decline in total profits ranked third among the 41 industrial sectors surveyed.

9. Monitoring the operational status of key enterprises:

1 . Product output

7 In the month, 32 large and medium-sized mining enterprises produced 24.5077 million tons of iron ore, accounting for about 20% of the nation's total output. The monthly production volume decreased by 3.8% compared to the same period last year. From January to July, cumulative iron ore production totaled 174.997 million tons, down 1.8% year-on-year. The monthly and cumulative decline rates were 3.7 and 8.3 percentage points lower, respectively, than the national industry average. In July, production of iron concentrate reached 8.64 million tons, a decrease of 2.3% compared to the same period last year.

2. Business Performance

7 In the current month, the main business revenue of 32 large and medium-sized mining enterprises totaled 4.705 billion yuan, compared to 7.621 billion yuan in the same period last year, representing a year-on-year decrease of 38.26%. The total profit suffered a loss of 753 million yuan, compared to a profit of 370 million yuan in the same period last year, representing a year-on-year decrease of 303.51%. The sharp drop in iron ore prices led to substantial declines in both main business revenue and total profit compared to the same period last year. As of the end of July, the cumulative losses of 32 large and medium-sized mining enterprises totaled 3.589 billion yuan.

3. Financial Status

(1) Financial Expenses: In July, the financial expenses of 32 large and medium-sized mining enterprises totaled 2.37. The figure reached 100 million yuan, essentially flat compared to 236 million yuan in the same period last year. As of the end of July, cumulative financial expenses totaled 2.037 billion yuan, an increase of 16.93% over the 1.742 billion yuan recorded in the same period last year. Although the central bank has cut interest rates three times this year, metallurgical and mining enterprises have yet to benefit from these reductions; financing remains difficult, and the cost of capital continues to stay high. (2) Asset-Liability Ratio: In July, the asset-liability ratio of 32 large- and medium-sized mining enterprises stood at 60.54%, up 3.8 percentage points year-on-year.

4. Cost situation

7 In the month, the manufacturing cost of iron concentrate at 32 large and medium-sized mining enterprises was 319.8 yuan per ton, down 23.84% year-on-year. The manufacturing cost of iron ore from open-pit mines was 51.15 yuan per ton, down 25.79% year-on-year; the manufacturing cost of iron ore from underground mines was 104.29 yuan per ton, down 23.08% year-on-year. Administrative expenses totaled 838 million yuan, up 8.4% year-on-year; sales expenses amounted to 98 million yuan, down 0.02% year-on-year.

  X. Corporate Updates

The economic situation remains severe, and various mining groups and mining enterprises are actively taking countermeasures, innovating management models, strengthening internal controls, and striving to reduce costs and improve efficiency.

HeSteel Mining Company Innovate management models and vigorously advance reform; One is Optimize management processes by implementing integrated, end-to-end management models for producing mines and adopting the shift supervisor system, thereby shortening the management chain. For mining enterprises with commonalities, we will integrate mineral resources, equipment, technology, and human resources to further optimize resource allocation. Following the reforms, the number of personnel at the section level in the seven producing mines has been reduced by 173. Second is Establish and strictly enforce a comprehensive budget management system, and implement a centralized management system for expenses. Strictly control non-productive expenditure, and conduct special budgeting and performance evaluations for other business-related expenditures as well as the “Three Public Expenses.” Promote centralized and unified management of funds, carry out targeted efforts to strengthen control over production materials, and reduce procurement costs and equipment inventory. Third is Strengthen benchmarking of technical and economic indicators as well as process cost benchmarking, improve efficiency, reduce costs, and comprehensively enhance competitiveness.

Pangang Mining Company ： Strengthen production organization, deepen cost control, and continuously optimize management. One is Fine-grained management enhances execution. ， In production management, we adhere to the principles of standardization, normalization, and proceduralization, strengthen internal production control, and enhance meticulous management of critical points in each stage and each process. This ensures smooth improvement in execution capabilities at all levels, thereby significantly boosting management efficiency. Second is Enhance technological innovation to strengthen the ability to generate value. ， We remain committed to leveraging technology as a key means of enhancing scale and efficiency. In response to the key challenges and bottlenecks in our year-round production, we have intensified our efforts in technological research and development by establishing five specialized task forces. We have fully mobilized professional technical personnel to enforce stringent on-site process controls, thereby achieving targeted reductions in resource consumption and further boosting production efficiency. Third is Deeply tap into internal potential for creating value, strengthen comprehensive budget management, and carry out in-depth cost-target management activities involving all employees, focusing on savings, tapping hidden potentials, and reducing consumption. Clearly assign responsibilities at every level, breaking down cost and profit targets to each month and implementing them at the workshop, team, machine unit, and individual employee levels. Strictly enforce the reward and punishment assessment system, and strive to achieve the goals of cost reduction and efficiency enhancement.