Major issues and conclusions
We recommend overweighting steel given Chinese production cuts in winter and re-stocking demand around the Lunar New Year holiday. Chinese steel production did not fall in the previous winter season as a whole because of robust demand and earnings; however, they still fell in November and December. In both 2016 and 2017, steel shares far outperformed the KOSPI during the earlier stages of Chinese output cuts. Strengthening 3Q18 earnings momentum amid ASP hikes also bode well for shares. Rising rebar dealer prices and plate ASP hikes are worth noting, which are