According to the latest customs statistics, China's steel exports in November were 2.95 million tons, 1.67 million tons less than the previous month (hereinafter referred to as month-on-month); In November, China's steel imports of 1.03 million tons, down 120,000 tons month-on-month; Net exports of crude steel in November were 1.94 million tons, down 45.5 percent from October. The decline in domestic steel exports accelerated in November from the previous month, and crude steel exports and net exports fell to the level in April 2006, close to the level in February this year affected by the snowstorm. The main reason was that the deterioration of the international demand environment led to the collapse of export orders, and the steel price difference at home and abroad was significantly narrowed. Crude steel exports fell by 5.26 million tons (63.8%) in November from a record high of 8.24 million tons in August, while imports fell by only 480,000 tons (31.6%) from a peak of 1.52 million tons in April, resulting in net crude steel exports falling by 4.96 million tons (71.9%) from a peak of 6.9 million tons, reflecting the sharp decline in international demand. Constrained by weak export orders and weak international manufacturing data, domestic steel exports are expected to continue their downward trend in December, but there is little room for month-on-month declines compared with November. Based on global economic fundamentals over the next six months, domestic steel exports are expected to remain low until the second half of 2009. Although the government abolished export tariffs on some steel products on November 12, it is difficult to change the trend of sluggish exports for two reasons: 1. With the sharp decline in the international steel price, the domestic and international steel price gap has narrowed significantly at present, and the export rebound is still waiting for the recovery of international demand. 2. Under the background of the drastic production reduction by international steel enterprises, the rebound of domestic steel export may face more trade protection pressure (such as anti-dumping) in the future. According to the export data of sub-products in October, panel products, which account for about 50% of exports, will face greater pressure next year due to the expansion of production capacity, and the total export of long materials this year accounts for about 25%, which will benefit more from the large-scale investment stimulus of the government. As a result of the recent sharp rally in steel stocks, the industry average P/B has recovered to 1.1 times, which is about 40 per cent above its all-time low, and valuations are within reasonable range given the underlying fundamentals of bottom cycle earnings over the next two years. In summary, based on the quarter-on-quarter trend, the steel industry faces phased trading opportunities for earnings improvement in the next 3-6 months (from deep losses to balance). However, the current industry valuation level has reflected the fundamentals of industry earnings in 2009, and we maintain the "neutral" rating of the industry.