Iron ore price cuts + inventory decline Iron and steel companies usher in real good

Recently, a number of steel companies received latest offers from Rio Tinto, BHP Billiton and Vale, and the price of iron ore that began to supply in October was reduced by 10%. This is the first time that the three major mines have lowered their prices this year.

Social inventories fell by 2.36% this week, with long products falling by 2.77% and plates falling by 2.02%. Total social inventories fell by 2.36% this week, of which long products fell by 2.77% and sheet fell by 2.02%. The decline in social stocks this week illustrates the resumption of destocking. The rise in steel prices and National Day holiday due to energy conservation and emission reduction disrupted normal destocking progress and lengthened the destocking cycle.

The steel industry index rose 8.10% this week and underperformed the Shanghai-Shenzhen 300 by 1.21%. From the perspective of the market, the Shanghai Composite Index surged from 2600 to 2900, and the steel sector saw relatively low gains in cyclical stocks. Bank stocks with less gains in the previous period performed strongly last week; property stocks also returned to the stock price before real estate regulation in April. . There are opportunities for the rotation of steel plates in the later period.

Valuation: As a result of energy conservation and emission reduction, the steel industry has undergone structural adjustment and its profitability has improved significantly. *** Appreciation and other factors increase the industry's profitability and valuation. The valuation of mainstream companies is currently 10 times.