China materials Chengdu unearthed

Companies were generally more optimistic than we expected at CLSA’sChina Forum last week: Steel prices to remain elevated, coal prices havebottomed on supply control measures, and positive demand views fromthe property and autos segments. China’s materials sector equities havecorrected, and we are less bearish. However, we are still concerned thatprices and activity indicators have rallied too far-too fast, and that neartermsteel complex price action is likely negative. We like BBMG andAngang (on weakness), while we are most negative levered coal names.