Resource stocks overview ---- May 12th

Due to factors such as lower-than-expected raw material demand, NDRC supervision, and reduced production due to steel plant maintenance, the iron ore market saw a significant decline in April. The recent iron ore market is also facing the impact of many bearish factors. First, the turning point in iron production in the previous period weakened market participants' expectations for iron production. The peak of iron production became a unanimous view in the market, and indeed so far iron production has decreased for four consecutive weeks. With the acceleration of steel plant maintenance leading to reduced production, the possibility of increased iron production decreases. Against the backdrop of successive reductions in coking coal and overall downward movement in raw material prices, steel plant profits have partially recovered. Therefore, there have been expectations of production resumptions in certain steel plants in the Shanxi region recently. However, the inadequate actual demand for steel will still put considerable pressure on steel plant production. Therefore, maintenance and production reduction will continue to be the market's main theme in the future, making it difficult for the resumption of production in certain regional steel plants to stimulate an upward adjustment in iron production. Therefore, it is expected that iron ore demand will gradually weaken in the medium to short term.

Furthermore, the current iron ore market has returned from expectations to reality. The market situation is expected to follow changes in the market for finished products and basically does not have the conditions for independent market movements. In other words, the strength of the demand for finished products is expected to determine the trend of the iron ore market. Currently, steel mills generally base their iron ore purchases on the quality of finished product shipments, maintaining a dynamically-adjusted purchasing strategy. However, due to lingering concerns over steel mill profits, the pace of blast furnace production is gradually slowing down. Consequently, the current low inventory levels of iron ore in steel mills, and the relatively low possibility of a significant increase in medium-term inventory, suggest that bearish iron ore demand will continue.

Shan Zheng iron ore (3047.HK) closed at HKD 15.25, down -0.52%.

Cumulative return: 1 week: -0.33%, 1 month: -12.41%, 3 months: -11.85%, 6 months: 12.3%, since listing: 104.7%

On May 11, CNOOC issued the "Sustainable Development Report 2022 of CNOOC."

The report shows that in 2022, CNOOC obtained a total of 21 commercial and potential commercial discoveries in the near sea of China, successfully evaluated 30 oil and gas structures, with domestic newly added geological reserves of approximately 0.328 billion tons of oil and approximately 145 billion cubic meters of newly added natural gas geological reserves.

In 2022, CNOOC vigorously implemented the "Seven-Year Action Plan" for increasing reserves and production, achieving a total oil and gas production of 0.12 billion tons of oil equivalent for the year, reaching a historic high. The domestic crude oil and natural gas production of the company increased by 3.39 million tons and 27 billion cubic meters year-on-year, respectively. The increment of crude oil accounted for over 60% of the national total increment, holding the top spot domestically for four consecutive years, highlighting the role as the "main force" safeguarding national energy security.