Investment Rating - The report maintains a cautious stance on steel equities, suggesting to wait for further concrete policies before investing [5]. Core Insights - The report discusses the recent government initiatives aimed at curbing excess competition and reducing capacity in the steel sector, highlighting a historical context of similar measures that have led to short-term price increases followed by declines [5]. - Investors are currently pricing in a potential "supply-side reform 2.0," but the report emphasizes the lack of concrete policies such as mandatory production cuts and consolidation of unprofitable mills, which are necessary for a more bullish outlook [5]. Summary by Sections Historical Policy Announcements - The report includes a table detailing historical policy announcements related to phasing out outdated capacities, showing various impacts on steel prices over different time frames [3]. - For instance, a symposium in January 2016 led to a 1.2% drop in rebar prices the following day, while subsequent announcements in February and April 2016 saw price increases of 1.0% and 0.3%, respectively [3]. Market Performance - Steel shares experienced significant fluctuations, with increases of 5% to 91% noted on July 2, attributed to government meetings and production cut notices in Tangshan [5]. - The report indicates that historical reactions to similar government announcements typically resulted in a 2% increase in share prices the following day, but declines of 2-5% after a month [5]. Global Steel Comparisons - A comparative analysis of global steel companies is provided, showcasing market capitalization, enterprise value, and performance metrics such as EV/EBITDA and PE ratios [7]. - For example, Baosteel has a market cap of $21.1 billion and an EV/EBITDA ratio of 6.0, while U.S. Steel Corp has a market cap of $12.4 billion with a PE ratio of 26.2 [7].