Steel prices in the fourth quarter is expected to shock pattern. CISA Composite Index is currently 135.04 points, down 0.33 percent month on month; long products and plate index were 142.96 and 130.37 points, down 0.63 percent month on month and 0.06%, respectively. Fourth quarter steel demand does not appear to improve, lack of upward momentum is expected steel prices; and upstream costs remain high, steel strong cost-push factors, steel market outlook is expected in shock pattern.

Fourth quarter iron ore price agreement is expected to remain high. According to quarterly pricing rules, we estimate, in the fourth quarter, Rio Tinto pricing benchmark at 2.66 cents / tons degree, corresponding to 62% of the grade of Australia powder mine co FOB price of about $ 165, down slightly from the third quarter, remained at high steel prices cost pressure is still larger.

Steel profit dropped significantly. We simulated the latest data Tianjin market Maori major varieties of steel wire rod, rebar, hot-rolled, cold-rolled and plate were 284 yuan / ton, 264 yuan / ton, 4 yuan / ton -156 yuan / ton and 24 yuan /ton. Profitability is expected to improve during the year difficult.

Steel stocks have not yet significantly stronger conditions, short-term market or can be expected. According to our estimates of the overall gross margin of steel and steel-cap stocks consistency, and we believe that steel stocks can be significantly stronger prerequisite for industry profitability turnaround in the second half is unlikely to improve the profitability of the steel, the probability of the industry in the fourth quarter is expected to the overall strength of not Big.

In the fourth quarter steel stocks investment theme. Listed companies focus on iron ore, steel companies and listed companies underestimate the value, including Panzhihua Steel Vanadium Titanium (8.95, -0.14, -1.54%), Daye Special Steel (13.05, -0.16, -1.21% ), Xining Special Steel (10.25, -0.25, -2.38%), Baosteel (4.99, -0.06, -1.19%), Xinxing Ductile Iron Pipes (8.27, -0.13, -1.55%), Hebei Iron and Steel (3.70, -0.01 , -0.27%) and other companies.