One week dynamics:

Domestic steel prices : This week the domestic steel market is basically stable . Carbon varieties of hot-rolled, rebar, wire rod rose slightly, cold-rolled , plate fell slightly , with a range of 70 yuan / ton or less , showing a clear trend of consolidation , downside is small but up weak . With the highest price compared to June , all varieties are still down about 40% ; compared with the lowest price , except for hot rolled coil rebounded by about 30 %, while other varieties Carbon rebounded about 6%. According to a survey Mysteel that investors will still dominate the view of consolidation . Bearish steel, hot rolled proportions were 37% , 14%, bullish percentage was 9 %, 15% .

International steel prices : This week the international steel market trend of differentiation , the United States continued to fall $ 40 plate / ton, down about 5.5 %, South Korea plate, rebar prices rebounded from 29 to 45 U.S. dollars / ton, or between 5% to 7% . LME billet futures prices closed at $ 335 / ton , was up 3.1%. Nearly three months, the futures have been 300 to 400 U.S. dollars / ton between the shocks .

Raw materials: As part of the stop limit production mills resume production, raw material prices continue to rise. Tangshan Coal Mine , mine were up 5 percent in India , 9.5%, sea freight also rose more than 6% . Compared with the highest price during the year , the ore is still down about 50%, sea freight fell by about 90%. Coke , scrap, pig iron prices remain stable ; nickel prices fell 7 %, basically taking last week's gains.

Stock: This week varied from community libraries , nationwide construction steel stocks continue to increase by about 3% , inventories increased 2.6% in the plate , cold-rolled , hot-rolled stocks fell nearly 2%. Iron ore port stocks continued to decline by 5% last week , compared with a decrease of approximately 17% in the highest point , but still higher than the historical average of 40 million tons .

Stock price and valuation: domestic steel stocks rose last week by 4.3% weaker than the CSI 300 Index 0.4%. International Iron and Steel stocks in general, are tracking 10 International Iron and Steel shares rose in seven , but where the market is relatively strong in only four .

Week Comments :

Plate rebound has nearly January , longs about 2 months ago rebounded thereafter maintain concussion. For now, we do not see the fundamentals supporting steel prices rebounded sharply , with a small steel mills resume production immediately after the rebound , to put pressure on steel prices continue to stabilize . Industry into a short-term cost- price equilibrium period, in the 2009 international agreement negotiations and demand recovers ore , steel prices likely to remain volatile .

With the apparent rebound in steel stocks , the industry average P / B has been restored to 1.05 times higher than the lowest level in history which is better than about 40% , taking into account the profitability of the industry will be in the next two years period at the bottom of the fundamentals , the industry 's current valuation already in a reasonable range ( 0.9-1.1 , assuming market valuation remains unchanged ) .

Overall, based on the angle QoQ trend , the next 3-6 months improved profitability of the steel industry faced periodic trading opportunities ( from deep losses to the balance ) , but the current industry valuation levels have reflected the fundamentals of industry profits in 2009 , we maintain a neutral rating.