The recent correction in steel prices in the Chinese domestic market warrants a closer look at China, which has so far taken the lead in global economic recovery. We believe the country’s RMB4trn stimulus package focusing on infrastructure spending and other measures to spur domestic spending in areas ranging from property and automotive to white goods, is intact. Premier Wen Jiabao’s recent pledge to maintain the unprecedented government spending and “moderately loose” monetary policy provides great comfort. Together with improving local steel demand from the rolling out of Malaysia’s stimulus packages and export of billets to fill the vacuum created by China, we reiterate our OVERWEIGHT stance on the steel sector.