Gold Guotai Investment opportunities in steel stocks

Iron ore price negotiations between Chinese steelmakers and international miners have begun to heat up, and steel spot traders are straining to wait for results. The other year, Rio Tinto, the world's mining giant, has reached an agreement with new Japan to cut iron ore contract prices by 33%, down from at least 40% per cent of China's demand. And the final outcome is undecided to make the spot business very nervous, and analysts believe that the relevant steel listed companies have limited impact.　　In view of the 09 iron ore first negotiations results still higher than the current spot ore prices, that the spot ore short-term may follow long ore prices continue to rebound, favorable iron ore resources enterprises. The expected result is a 35% reduction in Rio Tinto's approval of a one-third per cent price cut for Japanese steelmakers, which has put a lot of pressure on China's top negotiator, the Chinese Steel Industry Association. For the past 40 years, the first price agreement between mining companies and Steelmakers has become a benchmark for other companies in the industry to follow. But the market is hoping to break the benchmark system by relying on the biggest buyer of iron ore now.　　As at 17 o'clock in the afternoon yesterday, CISA did not make any comment on the matter. In fact, in the current situation of international steel production and iron ore spot market situation, 33% of the decline has been significantly lower than the previous China, Japan, Korea and Europe, the decline in public opinion, for the ore producers have been more satisfactory results, it is expected that BHP Billiton and Vale should accept the first results. CISA's attitude is mainly to pressure the negotiations and public opinion, it is difficult to determine the final outcome of the negotiations.　　The outcome of the market's expected balance is around 35%, but at the moment China's chips are not very heavy, and it is less likely to talk about lower declines in subsequent negotiations. China Securities and steel industry analyst Wang Hua simulation May 22 Australia 65% varieties of Yandi powder ore price (including long association fo B, spot shipping costs, handling fees, insurance premiums, value-added tax) for 617 yuan/ton, the same day Australia 63% powder Ore port plate price of 560 yuan/ton, Hebei Tangshan 66% The powder ore price is 700 yuan/ton, Liaoning Benxi 65% powder ore price is 600 yuan/ton.　　This decline is in line with expectations, and after the decline of the long association and spot ore price difference is small. Guotai researcher Tri Yini also believes that a 33% drop would be an acceptable price for ore producers. For domestic steel companies, considering the different factors such as wharf handling, taxes and charges, co a shipping fee of the company, the price of 33% will still be higher than that of 50-100 yuan, but the fixed price and stable supply of the long Co ore can help large companies to arrange production and accounting cost.　　It is therefore expected that steel companies will also be happy to accept the price cut.　　Fear of profit is eaten, spot business tension from the recent futures plate, wire and rebar deal insipid, Price also in dozens of points between oscillation, and no too big bright spot. "Today's high should be the response to the news, low Walk is still a worry about consumption, just near the festival is relatively light."　　"Huang Xing, an iron and steel analyst at the US Futures, said yesterday. Liu Bingqing, a steel analyst at China Securities and futures, told reportersHowever, the futures market reaction is not obvious, but the spot market has been rising nearly hundred yuan for three consecutive days. Shenzhen Jinhui Research and Development center manager Wang Peng bluntly, now everyone is waiting for the final outcome of China's negotiations dust settles, some steel customers are very nervous. "It's not going to cost much, it's not a lot of orders, it's more than expected, and it really makes some spot dealers die," he said.　　Wang Peng said that when the profit is meager, 1% of the changes will eat their profits, do not dare to take more goods, the middleman expects to finally be able to find a balance between 33% and 40%. "From now on, the outer plate iron ore price also constitutes certain support to the steel cost, but mainly because the downstream consumption is insufficient, to the futures market influence also depends on the final news." Huang Xing said.　　Wang Peng thinks that once the final result is beneficial to China, the steel futures will fall off the bad and quickly pull up.　　Cost reduction can offset steel price drop bad yesterday the entire steel plate rose before the industry, after the financial services sector, most steel stocks have varying degrees of increase. However, in the opinion of several brokerage analysts, these and iron ore negotiations are not directly related, because the early expectations are known.　　Moreover, the plate does raise demand, and the final situation is not determined. "Iron ore prices are likely to add a bit more profit margins, but it is likely to be reduced by steel to suppress this space." "Guotai Securities said in a recent report yesterday that it maintained an" overweight "rating for the industry, according to analysts at Haitong Securities, who declined to be named. According to Tri Yini, the calculation of the price of the new fiscal year starting from April 1, assuming that the long association of mines are down 33%, two quarterly sea freight rose 28%-30%, the spot iron ore price down 14%, Coke price down 12%, then the two-quarter use of long co-mining steel cost of tons of steel will be reduced by about 350 yuan,　　The cost of the ton steel that uses spot mine steel enterprise will drop about 211 yuan.　　Domestic steel prices in the two quarter are expected to fall by about 5% in the first quarter, to rebar, for example, the price of tons of steel (excluding taxes) about the chain down about 167 yuan, significantly lower than the cost of decline, it is expected that the two-quarter steel margin will be the overall rebound, of which the long-term high proportion of steel enterprises margin to recover more space. In view of the 09 iron ore initial negotiations results still higher than the current spot ore prices, Guotai believe that the short term may follow long ore prices continue to rebound, favorable iron ore resources enterprises, the proposal investors can pay attention to their own iron ore related steel enterprises, such as the Ling Steel shares, wine steel hongxing, xining Special steel and jinling mining.　　Capital of the capital of the king of China continued to recommend the low PB valuation of Anshan iron and steel shares. In yesterday's morning, CICC suggested continuing to focus on investment opportunities for steel stocks.　　As a result of this year's construction steel supply and demand situation better than the plate, a-share with reorganization, asset injection of the subject of steel enterprises Tangshan, Handan iron and steel, more attractive, the H. Newspaper reporter Liu Intern Zhang Yiqi