Yesterday the stock market rebounded sharply, and therefore the price of coking coal rose. We believe that the medium-term coking coal prices rebound pattern has been formed, the first 1401 contract above the rebound goal line at 1100 yuan. 

Bernanke's speech Wednesday bullish bias, resulting in prices of risky assets abroad rose in the short term rebound in the price of the inner disk basis. Fed's latest meeting showed that the slowdown in asset purchase plan is still pending, because many officials want to first see a further improvement in the job market. And this is expected to restore global confidence in financial markets. Released on the 10th meeting showed the Fed Chairman Ben Bernanke's press conference in June is not the exact month said it would gradually reduce the $ 85 billion of quantitative easing, but rather an attempt to clarify the trigger down prerequisite. Bernanke had a press conference on June elaborated a scenario: that asset purchases will slow later this year, and in the mid-2014 the unemployment rate reached 7% terminated. His remark, immediately plunge the global financial markets. We believe that the information on the current point of view, although in the future to gradually withdraw from the Fed quantitative easing is inevitable, but considering the impact far, Bernanke need to be careful to appease the market sentiment. 

We believe that in July the steel industry chain is expected to usher in a rebound. From the current data, although the market pessimism constantly, but we believe that supply and demand index has hit a historic bottom area, suggesting the inevitability of a rebound in steel prices and persistence. Capacity utilization rose simultaneously, indicating that the improvement stems from the demand side of supply and demand fundamentals are improving sustainability than to limit production. February 2013 onwards the steel industry continued to inventory, inventory turns have reached near the historical average, which also support steel prices rebound. Then look at the supply side, the supply of new government control of industry overcapacity particular attention to capacity. Demand stimulus, the new urbanization policies, local government financing platform pilot and market liberalization on the real estate corporate finance will be on infrastructure and is expected to form a positive impact on the real estate construction, thus stimulating growth in steel demand. 

Mills early 2013's led to a re-stocking coking coal stocks higher, after digestion of the next few months, as of June 28 samples of steel mills and independent coke plant stocks at 9.43 million tons of coking coal around such a level slightly lower in the same period last year (10.2 million tons). Upstream coking coke inventory is relatively high, as of July 4 ports 2,340,000 tons of coke inventory level has hit a new high since 2012. As of June 21, the domestic large and medium steel mills, coke inventories remained at an average of 10 days with the amount of coke. We believe that once the possibility of a rebound increase in steel prices, steel mills will take the initiative to increase the coke inventory, thus boosting coking coal prices. 

We believe that the steel industry chain in July will usher in a small peak restocking initiative, coking coal prices in 1100 yuan above the target line.