Investment summary:
Market review:
As of the closing on February 18, the steel sector rose 2.58% this week, the CSI 300 index rose 1.08%, and the steel sector rose 1.5pct ahead of the CSI 300 index. In terms of sector ranking, the weekly growth rate of the steel industry ranks ninth among Shenwan 31 sectors, with an increase of 1.64% year to date, ranking sixth among Shenwan 31 sectors.
Talk every Monday:
Crude steel output rose and apparent consumption picked up: at present, it is in the period of limited production and centralized maintenance in the northern heating season. In February, Hebei, Henan and other places still have strong efforts to limit the production of environmental protection, affecting the resumption progress of steel production after the year. As of February 17, the weekly output of five major varieties of steel was + 1.8% (+ 4.49pct) month on month, and the steel output increased slightly after falling for three weeks, With the significant increase in the proportion of construction sites and factories after the festival, the apparent consumption of steel this week was + 33.16% (+ 31.85pct) month on month; The recent high credit data, the loosening of real estate policy and the expectation of large-scale infrastructure investment drive the demand expectation of the steel market to be optimistic. However, the actual effect of the steady growth policy still needs to be verified by the high-frequency data in the next two to three weeks. The production restriction policy in the heating season also covers the middle of March. At that time, the output of the steel plant is expected to continue to rise;
The iron ore market supervision was further tightened and the profit per ton of steel continued to be repaired: this week, the national development and Reform Commission, the State Administration of market supervision, China Steel Association and other departments and institutions proposed to strengthen market supervision to ensure the smooth operation of the iron ore market. The price department of the national development and Reform Commission and the price supervision and Competition Bureau of the State Administration of market supervision went to Qingdao to carry out joint supervision and research, and further strengthen the expectation of stricter iron ore supervision, including traders Market participants including ports and exchanges are involved; As of February 17, iron ore port inventory had risen above 160 million tons, the highest since June 2018. Under the joint influence of the above factors, the main price of iron ore futures fell significantly; The weakening of ore price and the reduction of coke price continue to repair the profits of steel mills this week. However, in the long run, under the condition that the restriction orientation for crude steel output is not clear, it is expected that the trend of steel mills' resumption of production will continue. The policy focus is on ensuring the supply and stable price of bulk commodities. Under the background of significant decline in cost, it is expected that the rise of steel price will be difficult to continue. We will continue to focus on stainless steel, special steel The growth opportunities of seamless steel pipe and cast pipe enterprises and the valuation and repair opportunities of industry leaders are superimposed on the expectation of rising capital investment, and the investment opportunities brought by the accelerated pipeline transformation to the cast pipe and welded pipe market are highly concerned;
Market impact: the expectation of stable growth drives the short-term warming of the steel market, and the profit per ton of steel is repaired driven by the regulation of iron ore and the decline of coke price. In the medium and long term, the resumption of production of steel mills will continue. We pay attention to the suppression of the profit per ton of steel and the release of infrastructure demand due to the weak expectation of production restriction. The anti cyclical and growth oriented stainless steel processing enterprises have significant investment value, Special steel, seamless pipe, welded pipe and cast pipe enterprises with low valuation have good investment opportunities;
Investment strategy: focus on recommending stainless steel processing enterprises Zhejiang Yongjin Metal Technology Co.Ltd(603995) and pipe processing enterprises Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) with growth potential benefiting from the recovery of manufacturing industry, and recommend special steel leaders Citic Pacific Special Steel Group Co.Ltd(000708) with significant valuation advantages;
Risk tip: the policy implementation is less than expected, the supply contraction is limited, and the demand is less than expected.
