Key investment points
Investment strategy: Recently, the share price of steel has fallen sharply and the price of steel has risen, which deviates significantly. The decline of stock price is related to the systematic correction of the market and the pre loss of some steel enterprises in the fourth quarter; On the one hand, the rise in steel prices is driven by costs. On the other hand, the expectation of steady growth makes the market optimistic in the off-season. There have been cases of deviation of steel price and stock price in history. The most recent time was in the second half of 2021. The steel stock price fell sharply after peaking in mid September, while the steel price continued to rise to October 11, a month away. There was also a large-scale deviation in history - in the first half of 2008, the stock price plummeted and the steel price soared, and the deviation lasted for half a year. From the perspective of historical cases, the stock price is leading, but the duration of deviation can be long or short. This round of deviation is likely to continue until the spring, because this period of time is a low season, stable growth can not be falsified, steel prices may be strong driven by funds and expectations, and face uncertainty after the peak season. Iron ore prices have rebounded sharply recently. On the one hand, they benefit from stable growth and the expectation of steel enterprises to resume production after the Winter Olympic Games. On the other hand, the intensification of the epidemic in Australia makes the expectation of tightening supply. In terms of policy, we reiterated the pressure on iron ore, but iron ore is different from coal. The coal supply is controlled in China, while iron ore is overseas. The policy statement may suppress the mood, and the price will ultimately be determined by supply and demand. It is suggested to look for opportunities from the growing new material industry and pay attention to Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Zhangjiagang Guangda Special Material Co.Ltd(688186) , Fushun Special Steel Co.Ltd(600399) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Yongxing Special Materials Technology Co.Ltd(002756) , etc.
One week market review: this week, the Shanghai Composite Index fell 4.57%, the Shanghai and Shenzhen 300 index fell 4.51%, and the Shenwan steel sector fell 4.54%. This week, the main contract of rebar closed at 4829 yuan / ton, with a week-on-week increase of 118 yuan / ton, or 2.5%; the main contract of hot rolled coil closed at 4945 yuan / ton, with a week-on-week increase of 123 yuan / ton, or 2.55%; The main iron ore contract closed at 829 yuan / ton, with a week-on-week increase of 73.5 yuan / ton, or 9.73%.
Social inventory continues to increase: the national construction steel trading volume has not been updated this week. The social inventory of the five varieties was 11.149 million tons, an increase of 1.447 million tons month on month. The Spring Festival is approaching, the downstream is basically in a state of shutdown, and the apparent consumption of steel is weakening. In terms of inventory, the accumulation of inventory continues seasonally.
The production level of electric furnace decreased significantly: this week, the blast furnace operating rates of 247 Mysteel steel enterprises and Tangshan Steel Plant were 74.86% and 50.79% respectively, with a month on month comparison of -1.39pct and -3.97pct last week; This week, the blast furnace capacity utilization rates of 247 Mysteel steel enterprises and Tangshan Steel Plant were 81.51% and 69.71% respectively, with a month on week increase of + 0.43pct and -2.13pct. The operating rate of 71 home appliance arc furnaces this week was 10.05%, with a month on week ratio of -15.47pct; The capacity utilization rate was 12.78%, up from - 16.24pct last week. From the perspective of hot metal output, blast furnace production enterprises seize the last week before the start of the Winter Olympic Games and actively produce this week. However, with the opening of next week's Winter Olympic Games, North China will carry out relatively strict production restriction, the production of superimposed electric furnace will be basically stopped, and the output will decline in the future.
Changes in steel prices were basically flat: the myspic comprehensive steel price index increased by 0.33% on a weekly basis, including 0.2% for long materials and 0.48% for sectors. Shanghai rebar 4730 yuan / ton, unchanged on a weekly basis. Shanghai hot rolled coil 4940 yuan / ton, down 10 yuan / ton week on week, an increase of 0.20%. The high steel price stabilized this week, and the weak performance of demand in the off-season will not interfere with the steel price. Under the tone of stable growth, the market is optimistic about the recovery of demand in spring, and it is expected that the short-term steel price will still be dominated by shock.
The ore price fluctuated narrowly and the delivery volume decreased: platts62%138.75 US dollars / ton this week, increased by 1.35 US dollars / ton week on week, and the price difference between high and low products narrowed. Last week, the shipment volume of Australia and Brazil was 1918.2 tons, a month on month decrease of 1542000 tons, and the arrival volume was 10.845 million tons, a month on month decrease of 1017000 tons. The latest steel mill imported ore inventory days are 34 days, an increase of 4 days compared with the last time. Tianjin Zhunyi metallurgical coke was 3210 yuan / ton, unchanged from last week. Scrap 3170 yuan / ton, 20 yuan / ton less than last week. This week, the national development and Reform Commission proposed to pay close attention to the changes in iron ore market prices and effectively ensure the stable operation of prices. This will have a certain inhibitory effect on ore prices at the emotional level. From the perspective of actual supply and demand, the traditional off-season demand superimposes the inhibition of the Winter Olympic Games on supply, and the ore price may be corrected in the short term.
Accelerated decline in profits: the decline in profits of mainstream steel grades accelerated this week. According to our simulated steel data, the coke price at the raw material end continued to rise during the week, and the billet cost further increased. The average weekly price of finished products stabilized. The profit level per ton of steel fell significantly under the cost squeeze. The gross profit of hot rolled coil (3mm) decreased by 116 yuan / ton, and the gross profit margin decreased to 5.88%; The gross profit of cold rolled sheet (1.0mm) is reduced by 125 yuan / ton, and the gross profit margin is reduced to 0.74%; The gross profit of deformed steel bar (20mm) is reduced by 15 yuan / ton, and the gross profit rate is reduced to 5.56%; The gross profit of medium and heavy sector (20mm) decreased by 93 yuan / ton, and the gross profit margin decreased to 2.42%.
Risk tip: the sharp decline of macro economy leads to pressure on demand; The pressure at the supply end continues to increase.
