Table of Contents
Analysis on 2008 China Steel Market and Outlook on 2009
I Analysis on sharp rise and sharp fall in 2008 China steel market
1 Massive hike in China steel market in H1, 2008
● Snow storm affected steel supply
● Power coal and coke supply shortage during Spring Festival
● Massive rise in iron ore contracted price
● Influences of Beijing Olympics
● Prefab construction after Wenchuan earthquake drove up cold rolled products market
● Continuous depreciation of US dollar, crazy hike in commodity price and spreading inflation all over the world
● World steel price surged
● In spite of the tightened money policy the government implemented, inflation pressure still mounted, which cushioned the contradiction of the glut.
2 China steel price plummeted from the 3rd quarter.
● China economy grew slower in the 3rd quarter.
● Continuously tightening money policy exerted great pressure on capital flow.
● International commodity price dropped with the depreciation of USD
● Financial crisis blew heavily on market psychology.
3 China crude steel supply forecast
● According to current market situations and production cutbacks amid many steel mills, we revised its formal prediction of 520-530 million tons of 2008 crude steel production to about 510 million tons, up 4.2% or 20 million tons year on year.
● We assumes China steel products exports of 2008 at 57.50 million tons, down 8.2%
or 5.15 million tons year on year
II China steel market anticipation for 2009
1 We assumes 540 million tons of China crude steel output in 2009.
● Market price will further curb the growth of steel production
● Coke supply continue to curb steel production
● The investment in China steel industry will maintain low.
● Flats production will stay high, and glut will not change.
● The utilization of steel capacity stay high.
2 Financial crisis hinder China steel exports
● World economy grow slower and steel demand dims
● China steel exports will be improved with the resolve of financial crisis.
3 Steel demand in China home markets will sustain stable rise, but the growth rate will drop from 2008.
● Advantages—Comprehensive national power is strengthened
● Disadvantages—Domestic demand takes up small proportion of GDP.
● Expectation for 2009 China Economic Growth
--- Little headroom for FAI rise.
--- Export rise slows down further.
--- Consumption grow slower.
● Analysis on Downstream Sectors. In 2008, some steel-consuming industries are also on downward slope.
● Steel consumption rise forecast in China home market in 2009
4 China steel market forecast for 2009
Table 1: Average Price Change in China 28 Major Cities (in yuan per ton)
     2 Backward Capacity Elimination in China Steel Industry
     3 IMF Outlook on World Economic Growth
4 China Crude Steel Net Export Scenarios
5: Crude Steel Demand and GDP
6 Crude Steel Demand and FAI
7: Economic Gauges in 1997-2008
Graph 1: China Steel Price Index
2 China Steel Products, Coke Daily Output in 2007-2008
3 Euro VS USD in 2007-2008
4 Global Steel Price Index (SH_CSPI)
5 China Economic Gauges in 2007-2008
6 China Crude Steel Monthly Supply during 2005-2008
7 China GDP Quarterly Growth in 2007-2008
8 RMB VS USD in 2007-2008
9 China Industrial Enterprises' Profits in 2001-2008
10 China New Foreign Exchange Reserves VS Trade Surplus+ Foreign Investment in 2007-2008
11 China Money Supply in 2004-2008
12 Assumes China Crude Steel Output of 2008
13 Assumes China Steel, Billet/slab Import of 2008
14 Assumes China Steel, Billet/slab Export of 2008
15 Assumes China Crude Steel Impo& Expo of 2008
16 Assumes China Crude Steel Supply of 2008
17 China Crude Steel, Pig Iron, and Steel Products Daily Production in 2007-2008
18 Large Steel mills Sales Income and Profit Ratio in 2006-2008
19 China HRB Monthly Average Price in 2006-2008
20 China Coke Supply VS Crude Steel Production in 2001-2008
21 China Coke Daily Production in 2007-2008
22 Investment Growth in China Smelting and Pressing of Ferrous Metals in 2000-2008
23 China Longs, Flats Production in 2001-2007
24 China Flats Impo& expo Change in 2000-2008
25 Prediction on World Crude Steel Output in 2008-2009
26 Crude Steel Apparent Consumption Outside of China in 2008-2009
27 JPY VS USD in 2006-2008 (in 10000 yen)
28 SKW VS USD in 2006-2008 (in 10000 won)
29 IDR VS USD in 2006-2008 (in 10000 rupee)
30 RUR VS USD in 2006-2008
31 BRL VS USD in 2006-2008
32 AUD VS USD in 2006-2008
33 EURO VS USD in 2006-2008
34 China Economic Growth in 2000-2008
35 China Social Fix-asset Investment in 2000-2008
36 China Consumption Growth in 2000-2008
37 China Machinery Industry Output Value in 2001-2008
38 China Machinery Industry Output in 2007-2008
39 Investment in China Property Industry in 2000-2008
40 Monthly Change in Property Industry Investment in 2007-2008
41 House Sale Area Growth in 2000-2008
42 China Automobile Output in 2000-2008
43 Monthly Change in China Automobile Output in 2007-2008
44 China Shipbuilding Completion in 2000-2008
45 China Washing Machine Output in 2000-2008
46 Monthly Changes in Washing Machine Output in 2007-2008
47 China Refrigerator Output in 2000-2008
48 Monthly Changes in Refrigerator Output in 2007-2008
49 China Air Conditioning Output in 2000-2008
50 Monthly Changes in Air Conditioning Output in 2007-2008
51 China Container Output in 2000-2008
52 Monthly Changes in Container Output in 2007-2008

Analysis on 2008 China Stainless Steel Market and Outlook on 2009
China stainless steel market performed depressed on the whole in 2008. Despite that stainless steel plate/strip supply declined obviously year on year at home market, 300 series stainless steel market went on dipping and maintained positive correlation with LME nickel futures price under the impact of continuous weak demand and nickel futures price fall.
Stainless steel supply surplus will not witness significant improvement in 2009. Sharp drop in 304 series stainless steel price since May, 2007 has shown its advantages gradually compared with 430 and 201 series. It is expected that China stainless steel market will go on moving vulnerably in 2009, while 304 series price drop is likely to slow down.
I Review of international stainless steel and raw material market in 2008
1 International stainless steel output edged down
2 Nickel supply and demand unbalanced in international market
3 International high carbon ferrochrome price fell down after rushing high
4 Stainless steel price in international market
II Review of China stainless steel and raw material market in 2008
1 Jinchuan nickel ex-works price went on dropping
2 High carbon ferrochrome price fell down after rushing high
3 Review of China stainless steel market in 2008
4 China stainless steel output growth witnessed drastic drop in 2008
5 China stainless steel import and export status
6 Equipments improvement and capacity additions since 2007
7 Stainless steel inventory in key markets in 2008
III Outlook of China stainless steel market in 2009
1. Outlook of nickel market in 2009
2. Outlook of high carbon ferrochrome market in 2009
3. Outlook of China stainless steel demand in 2009
1) Real estate
2) Home appliance
4. Outlook of stainless steel market outlook in 2009
1) 300 series
2) 400 series
3) 200 series

Table 1: International ferrochrome supply and demand during 2005-2008 (Quantity in 10000 tons)
Table 2: Contract price of ferrochrome procured by European and Japanese steel mills from South Africa (USD per pound)
Table 3: Jinchuan 1# nickel ex-works price in 2008 (Price in yuan per ton)
Table 4: China stainless steel price in 2008
Table 5: SS plate/strip (width≥600mm) import and export status of Jan.-Sep.2008
(Quantity in 10000tons)
Table 6: Equipments improvement and capacity additions since 2007

Graph1: LME Three Month Nickel Price and Inventory Curve since 2006
Graph 2: CRU: International Stainless Steel Price Index Curve since 2006
Graph 4: Price Comparison between LME Three Month Nickel Price and Stainless Steel
(2006-2008)
Graph 5: Stainless Steel Price Curve at Wuxi Market since 2006
Graph 6: China Steel Price Index (SHCPI) Curve since 2006
Graph 7: CR Stainless Steel Output of Key Manufacturers since 2007 (Quantity in 10000 tons)
Graph 8: HR Stainless Steel Output of Key Manufacturers since 2007 (Quantity in 10000 tons)
Graph 9: CR Stainless Steel Sheet Import and Export since 2007 (Quantity in ton)
Graph 10: HR SS Medium Wide Strip Import and Export since 2007 (Quantity in ton)
Graph 11: Stainless Steel Inventory in Wuxi Market since 2007 (Quantity in 10000 tons)
Graph 12: Stainless Steel Inventory in Foshan Market since 2007 (Quantity in ton)

Annual Report: China Coke Market in 2008 and the Outlook for 2009
In 2008, China coke market soared first and then fell into chilled season. For detail, affected by steelmakers’ demand, snow havoc and Beijing Olympics, coke supply-and-demand conflict of H1 2008 worsened, and then market price peaked out. However, the situation totally changed in the second half. On the expansion of global financial crises, steel mills cut coke demand both at home and abroad; consequently, coke price crest cooled down to the level of early year.
In 2008, Chinese government raised coke export tariff for twice, and then coke export cost increased sharply. As a result, the coke exports of 2008 declined for the first time since 2005. In 2009, pressurized by high production cost, capacity oversupplies and falling demand, China coke price is anticipated to volatilize slightly.
I Overview on 2008 China coke market
1 Analysis on domestic coke price trend
Graph 1 China metcoke & prime coking coal price in Jan.06-Oct.08
2 Analysis on the surroundings of China coke market
a) China coke production growth slow down
Graph 2 China coke output in Jan.2007-Sep.2008
b) Market supply-and-demand conflict worsened
Graph 3 China coke apparent consumption in Jan.2007-Sep.2008
c) Coal market was featured by supply constrains and price hike.
Graph 4 China coking coal purchase price in Jan.07-Oct.08
Graph 5 China coking coal import in Jan.2007-Sep.2008
d) China coke export price soared
Graph 6 China coke export tariff change since 2004
Graph 7 China coke export volume & price in Jan.07-Sep.08
Graph 8 China coke inventory & export price at ports in Jan.07-Sep.08
II Outlook for 2009 China coke market trend
1 To wash out outdated production capacity
2 Coke demand change of steel industry
Graph 9 China BFs status in 2008-2009
3 Coal supply to still be tight
4 Transportation constrains to loosen
5 International importers’ reliance on Chinese coke to weak
Graph 10 Global new coke projects in 2008

Annual Report: China Scrap Market in 2008 and the Outlook for 2009
Due to steel price hike and raw material supply constrains, China scrap market in the first half of 2008 trended up with demand rising and scrap price breaking new records in succession. Meanwhile, on the startup of newly-built EAF, international scrap price zoomed, and then Chinese importers slashed scrap procurement form overseas markets, consequently, domestic supply-and-demand conflict worsened.
However, since H2 global financial crisis badly hit China steel market, and then increasing steel enterprises started to overhaul on equipments, scrap price dived by 50 percent versus the peak of June as a result. Since China held limited scrap stocks, and EAF production capacity of developing countries increased sharply, scrap supply in 2009 will be still tight, and the price is anticipated to volatilize slightly on the basis of the level of Q4 2008.
I Review on China scrap market in 2005
1 China scrap price rose first and then trended down
2 China domestic scrap supply and demand situation in 2008
a) China scrap supply was tight
b) Scrap demand of steel mills warmed up
3 Overview on China scrap import in 2008
a) Imported scrap declined successively
b) International scrap price retreated from high level
II The outlook of China scrap market for 2009
1 China scrap to keep tight
2 Price trend of iron-making raw materials to affect scrap market
3 Tax policies’ adjustment to benefit scrap market
4 International scrap price not to drop sharply

Graph 1 China scrap & rebar price trend in Jan.2006-Oct.2008
Graph 2 China steel stocks during 1949-2007
Graph 3 Iron-to-steel ratio & scrap price trend in Jan.2007-Sep.2008
Graph 4 China scrap consumption during 2003-2008
Graph 5 China scrap import & price during Jan.2007-Sep.2008
Graph 6 China scrap import by region during Jan.-Sep.2008
Graph 7 China scrap price during Jan.2006-Oct.2008
Graph 8 EAF additions of steel mills in South Korea in 2008
Graph 9 Average scrap price of Japan during Jan.2007-Oct.2008
Graph 10 Domestic scrap supply situation in recent years
Graph 11 EAF projects under construction and planned to be built

Annual Report: China Iron Ore Market in 2008 and the Outlook for 2009
I China iron ore supply and demand relationship appeared relax in 2008
1、 China steel output growth rate slowed to one digital in 2008
2、 the newly additional iron ore resources in China soared up by large margin
II Traditional international iron ore price mechanism encountered challenge in 2008
1 iron ore price between China and Brazil showed that high quality high price
2 the initial price did not win the consensus to becoming uniformed bench mark price
3 Brazil asked for price rise once again which brought about great challenge for long-term contracted price mechanism
4 Australia took the lead in signing the first flexible iron ore long-term price agreement
5 Australia augmented spot ore sales by large margin
III ocean freight suffered great ups and downs
IV Iron ore price in 2008 tumbled after substantial growth
1 domestic iron ore price plunged in H2 2008
2 imported iron ore price hovered on high side
3 Iron ore inventory jumped greatly at port
V Prospect of 2009 iron ore market
1 China iron ore supply and demand relations appears relaxed
1.1 International iron ore supply will climb up
1.2 Chinese iron ore output soared substantially
1.3 Iron ore demand
2 FY2009 international iron ore price negotiation stands at a turning point
Note:
Graph 1: Output and growth rage of different products of Jan.-Aug. during 2000-2008
Graph 2: International ocean freight trend in Jan. 2006-Oct. 2008
Graph 3: Iron ore import price contrast by countries in 2006-Sep. 2008
Graph 4: Chinese iron ore price contrast in Jan. 2006-Oct. 2008
Graph 5: Price contrast between domestic and imported ore in Jan. 2006-Oct. 2008
Graph 6: Contrast among the average price of iron ore in 2004-Sep. 2008
Graph 7: Statistics of Chinese iron ore import by countries in 2006-Sep. 2008
Graph 8: Chinese iron ore imports and inventories at port in 2006-Oct. 2008
Table 1: FOB price of iron ore from Australia and Brazil in FY2008
Table 2: Iron ore imports in 2006-2008 by counties
Table 3: Indian iron ore export price in January-October of 2007 and 2008
Table 4: Indian iron ore export price in January-October of 2007 and 2008
Table 5: Iron ore output of BHP Billiton and Rio Tinto in 2007-2008

Analysis on 2008 China Ferroalloy Market and Outlook on 2009
In the first half year of 2008, China steel products continued growing rapidly, which forcefully pushed ferroalloy demand up. Although the state government reined in ferroalloy exports hike effectively through raising export tax, the relationship between supply and demand at home market further worsens since year-on-year growth of ferroalloy output declined obviously due to strengthening environmental protection and continuous hiking power and raw material cost.
Common alloy price surged up on the whole in H1, 2008, which all hit new record high, while special alloy price maintained stable with uptrend fueled by international market rally, transaction kept flat. In the second half, as more steel mills limited or shut down production following the lead of steel price slump, raw material procurement decreased, ferroalloy price fell down on the whole.
Considering of global economic slowdown, the determination on saving energy and reducing emission, and limiting high energy consuming, high polluting and resources products export, China ferroalloy market is predicted to go on correcting vulnerably in 2009, while market demand is likely to warm up in the second half year.
I China ferroalloy supply in 2008
1. Ferroalloy output in China domestic market
2. China ferroalloy import and export status
II China ferroalloy market review in 2008
1. China common ferroalloy market review
1) Ferrosilicon
2) Manganese based alloy
3) Ferrochrome
2 Review of special alloy market
1) Ferromolybdenum
2) Ferrovanadium
3)  Ferrotungsten
4)  Other alloys
III Major Factors Influences Ferroalloy Market in 2009
1) China macro control policy
2) China steel sector development
3) Raw material and power supply cost
4) International market situation

Table 1: China Ferroalloy Export Tax Adjustment since Jan. 1, 2008
Table 2: China Ferroalloy Import and Export in Jan.-Sep, 2008 (Quantity in 10000 tons)
Table 3: Supply and Demand in Western Counties during 2005-2008
Table 4: Manganese ore export quotation from BHP Billion to China (USD per ton unit)
Table 5: Global manganese ore supply and demand during 2005-2009 (Quantity in 10000 tons)
Table 6: International ferrochrome supply and demand in 2005-2008 (Quantity in 10000 tons)
Table 7: Contract price of ferrochrome procured by European and Japanese steel mills from South Africa (cent per pound)
Table 8: China macro control policy against ferroalloy industry in 2007-2008
Graph 1: China Ferroalloy Output during 2007-Sep, 2008 (Quantity in 10000 tons)
Graph 2: Breakdowns of China Ferroalloy Production
Graph 3: China Ferroalloy Import and Export during 2007-Sep, 2008 (Quantity in 10000 tons)
Graph 4: Breakdowns of China Ferroalloy Export in 2004-2008
Graph 5: China Common Alloy Price Curve during 2006-Oct. 2008
Graph 6: China Common Alloy Export Price Curve during 2006-Oct. 2008 (Price in USD per ton)
Graph 7:Cr-based Stainless Steel Output in Taiyuan Steel during 2003-2008
Graph 8: China Special Alloy Price Curve during 2006-Oct, 2008
Graph 9: China Special Alloy Export Price Curve during 2006-Oct, 2008 (Price in USD/Kg)