In December 2008, domestic steel prices continued to rebound slightly. The average steel prices of the major cities in the country tracked by us showed that, as of December 31, 2008, the average price of cold rolled steel nationwide was 4,531 yuan/ton, which was a 13% rebound from the lowest price; Steel 3696 yuan / ton, compared to the lowest price reached 6%; wire 3671 yuan / ton, rebounded about 7% from the lowest price; hot rolled rebound is the highest, the current average price of 3938 yuan / ton, compared with the lowest price rebound rate reached 38 %.

According to the financial data of 71 large and medium-sized steel mills in the iron and steel industry that have been counted by China Steel Association in November 2008, the industry’s monthly loss amounted to 12.77 billion yuan. Since the losses in the steel industry in November were mainly due to the use of high-priced raw materials by large domestic steel mills, and the inventory impairment losses of the steel mills in 2008 will be reflected in a concentrated manner, it is difficult for the industry's financial data to be optimistic. Based on this, the country is strengthening the support for the steel industry, and the upcoming planning for the revitalization of the steel industry will be announced. However, the specific content has not yet been announced.

At present, the overall valuation of the steel industry PB has entered a reasonable range of 0.8- to 1, PE has reached about 7 times; under the policy-driven and environmental improvement expectations, demand will gradually increase, steel prices stabilized and the bottom of the industry It will be basically established that the steel industry can expect the expectation of profit improvement. Based on the above analysis, the investment rating of the industry for the full year is raised as a cautious recommendation.

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