Daily Brief Energy/Materials: SICC, Crude Oil, SGX Rubber Future TSR20, China Steel, Copper, BP PLC, Valeura Energy Inc, Rayzon Solar Ltd, Dynacor Group and more

• SICC (688234 CH), a manufacturer of high-quality SiC substrates, aims to raise around US$500m in its H-share listing.
• As per Frost & Sullivan, based on 2023 sales, SICC was the second largest manufacturer globally with a market share of 14.8%.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• Global upstream oil and gas development spending is expected to decline by about 1.1% to $543 billion, with reductions in all regions except the Middle East
• Major Chinese National Oil companies, US E&P operators, and Russian companies like Gazprom are all cutting their capital spending in response to lower oil prices and increased costs due to tariffs
• Despite strategic shifts towards low carbon projects, there is a significant reduction in investment in these areas, with upstream investment not seeing any benefits

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• Overall bearish market conditions in China
• Mixed trade data underscore tepid demand conditions
• Arbitrage window might open as spread between Chinese and international prices narrows 

• CSC saw peak profitability in 2021, but margins and earnings have since contracted sharply, with EBITDA/ton down to just US$15 in Q1 2025.
• It now targets US$3.1–4.7B capex over 5 years toward green steel, premium products, and ASEAN expansion, though execution risks remain high.
• Despite modest growth and high leverage, CSC trades at 15x EV/EBITDA and over US$1,500 EV/ton—well above regional peers.

• COMEX spreads blew out to over 2,500 USD/ton (a ~25% premium) last night as President Trump announced a likelihood of a 50% import tariff on the metal. 
• We believe this move will deplete inventories further at the LME (to be shipped to the COMEX) and lead to a rally in copper prices on the LME as well.
• Follow our prior insight, Copper Breaches 10k USD: Easy Journey to 11k USD/Ton On Lower Inventories In The Short Term 

• U.S. Copper Market Gap: 1.3 Mt refined copper supply gap due to limited 0.4 Mt refining capacity against 1.7 Mt demand, despite 1.1 Mt mined ore.
• Impact on Market and Users: 50% tariff may raise prices 15–25%, adding $200–400/vehicle and 3–5% construction costs, while boosting refining investment.
• Way Forward: Expand refining capacity, streamline permitting, and ensure policy stability to process exported ore and cut import reliance by 2030.

bp is pivoting back towards its traditional upstream oil and gas business, with a renewed focus on shareholder returns. It will remain an integrated energy play with strong differentiating factors (trading, high-quality assets) but with a less aggressive tilt towards renewables, a strategic review of lubricants (Castrol) and a primary focus on maximising shareholder returns. In our view, this pivot could reduce its discount to peers. We believe oil and gas exposure is important in the construction of investors’ portfolios as it offsets the negative impact of energy price spikes.

• 2Q25 production was 21.4 mbbl/d, which is very close to our forecast (~22 mbbl/d).
• The company reported a net cash position of US$241.9 mm at end-June, significantly above our expected US$210 mm.
• This reflects both the timing of capital expenditures across 2025 and continued strong operating performance.

• Rayzon Solar Ltd (0127839D IN) (RSL)  is looking to raise about US$175m in its upcoming India IPO. The bookrunners for the deal are SBI, Ambit, IIFL.
• RSL, established in 2017 as M/s Rayzon Green Energies, manufactures and sells Mono PERC, TOPCon, and bifacial solar PV modules for utility, C&I, and residential markets.
• According to the CRISIL Report, RSL is among the top 10 solar photovoltaic (PV) module manufacturers in India, with an installed capacity of 6.00 GW as of Mar 25.

• DNG announced that it has signed a share purchase agreement to acquire 100% of the 1,500tpd permitted processing plant in Ecuador.
• The total consideration for the plant is $25M (including $9.75M for the acquisition and $15.25M in capex).
• The asset will produce 75Koz of gold, or $10M in OCF using our assumptions, representing 2.5x OCF.