Network Metals LLC

We recently read a Jefferies report changing Reliance Steel (NYSE:RS) from ‘hold’ to ‘buy’. We tend to disagree with this, strictly based on market fundamentals that are pointing toward an influx of imported steel and aluminum products from China (as we have been talking about for the last month or so). The steel distributors in the States will face fierce competition from imports until the Chinese domestic markets substantially improve. The key indicator to watch will be the Chinese export rebate policy in the coming months.