Goldman Sachs: Expects that the profit margins of cement, steel, and paper packaging will remain under pressure in the second half of the year. Downgrades ratings for CNBM (03323) and CR BLDG MAT TEC (01313).

Goldman Sachs released a mid-term performance review report on China's commodity market, stating that the profit margins for cement, steel, and paper packaging are expected to remain under pressure in the second half of the year, but they remain optimistic about coal due to a robust demand outlook. The firm downgraded the rating of CNBM (03323) from "Buy" to "Neutral" and reduced the rating of CR BLDG MAT TEC (01313) from "Neutral" to "Sell"; meanwhile, they maintained a "Buy" rating for China Coal Energy (01898) and Anhui Conch Cement (00914). The report covers approximately 20 listed companies, including steel, coal, cement, and paper packaging. Goldman Sachs pointed out that most cement companies performance in the first half of the year fell short of expectations, coal companies generally met expectations, while steel companies performed better than initial market concerns. Key trends include strong demand and tightened safety regulation supporting coal prices; cement profit margins weighed down by weak construction demand and limited supply-side advancements; steel profit margins remaining low due to continued demand deterioration and limited supply discipline; and paper packaging profit margins weakening year-on-year due to supply pressures. Compared to the actual performance in the first half of the year, Goldman Sachs adjusted the earnings forecasts for the covered companies by downgrading by 4% to as much as increasing by 14%. Specifically, coal companies' earnings forecasts for 2026 to 2027 were downgraded by 2% to 9%, cement companies' 2027 forecasts were cut by 28% to 112%, the majority of steel companies' 2027 forecasts were downgraded by 14% to 41%, and the forecasts for paper packaging companies for 2026 to 2027 were revised up by 1% to 5%.