Morning Insight: August 5,2026

Morning Insight:August 5, 2026 LinlinGaoCertification：Z0002332gaolinlin@gtht.comYu Chen WuCertification：Z0024232wuyuchen@gtht.com Main Body Ferrous Alloys:Bearish on Silicomanganese, Range-Bound on FerrosiliconSilicomanganese (SiMn): Bearish outlook amid ample supply and lowercosts. Market fundamentals remain weak as oversupply persists andproduction costs continue to decline. On the demand side, steel mills remain in a production cut cycle,reducing rigid demand for alloys while showing little willingness toactively replenish inventories. On the supply side, alloy producers continue to deliver previously hedgedorders, leaving limited incentive for further production cuts. As aresult, inventories at alloy plants continue to accumulate, reinforcingthe oversupply picture. From a cost perspective, concentrated arrivals of imported manganese orehave pressured port prices lower. Port inventories continue to build,while overseas miners have lowered their offer prices, further weighingon domestic manganese ore quotations. Ferrosilicon (FeSi): Stable fundamentals with a range-bound outlook.Increased demand from the magnesium sector has largely offset weakerdemand from steelmaking. The main recent market drivers have been persistently high electricitycosts and production curtailments by major producers in Northwest Chinafollowing the recent decline in prices, leading to significantly higherprice volatility. However, rallies drivenby such supply-side adjustmentsare unlikely to be sustained. As prices rebound, alloy producers areexpected to increase hedging activity, limiting further upside. Therefore, chasing the rally is not recommended. Open Interest Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch Source：iFind, GUOTAIJUNAN FUTURESResearch News Highlights: 1. The People's Bank of China, the country's central bank, on Tuesdayannounced that it will carry out a 500-billion-yuan (about 73.6 billionU.S. dollars) outright reverse repo operation on Wednesday to maintainample liquidity in the banking system. This operation will be carried out with a fixed quantity throughinterest-rate bidding, with winning bids determined at multiple pricelevels and featuring a maturity period of three months. As 300 billion yuan of three-month outright reverse repos are due tomature in August, this means Wednesday's outright reverse repo operationrepresents an increased rollover. Outright reverse repo operations, a tool the central bank introduced inOctober 2024 to manage liquidity in the national banking system, areconducted once each month with a tenor of no more than one year.These operations have enriched the country's monetary policy toolkit,complementing previous measures such as temporary repos, temporaryreverse repos, and the buying and selling of treasury bonds. (Source:Xinhua) 2. China's services trade expanded 8.3 percent year on year in the firsthalf of 2026, according to data released by the Ministry of Commerce on Tuesday. The total value of service imports and exports reached nearly 3.78trillion yuan (about 556.56 billion U.S. dollars) from January to Junethis year, according to the data. Throughout the period, travel service exports grew at the fastest rateamong the top five service export categories, rising 31.1 percent to229.2 billion yuan. Knowledge-intensive services trade rose 6.7 percent year on year to 1.66trillion yuan during the same period, accounting for 44 percent of allservice trade. Notably, exports of personal cultural and entertainmentservices and the charges for the use of intellectual property surged 57.2percent and 44.3 percent respectively. Tuesday's data also showed that imports of transport services totaled498.1 billion yuan during the period, up 30.4 percent, the fastest growthrate among the top five service import categories. (Source: Xinhua) 3. Broad money supply (M2) in the Macao Special Administrative Region(SAR) retreated by 1.7 percent month-on-month to 847.6 billion patacas(about 104.9 billion U.S. dollars) in June 2026, according to statisticsreleased by the Monetary Authority of Macao (AMCM) on Monday. Currency in circulation and demand deposits dropped 1.2 percent and 1.0percent, respectively, resulting in a 1.1 percent decrease in M1 from theprevious month, the AMCM said. Quasi-monetary liabilities declined 1.8percent during the period. According to the monetary authority, resident deposits fell 1.7 percentmonth-on-month, while non-resident deposits increased 11.6 percent. Meanwhile, public sector deposits with the banking sector increased 3.0percent. Total deposits in the banking sector rose 2.3 percent.In terms of loans, domestic loans to the private sector decreased 0.7percent from a month earlier. External loans rose 0.4 percent. (Source:Xinhua) Guotai Junan Futures Co., Ltd. (hereinafter referred to as "the Company") is qualified to conduct investment consultingbusiness in the fut