This week’s view
The central economic work conference was held, with steady growth far exceeding market expectations, and metal materials are expected to benefit fully
The central economic work conference requires that next year’s economic work should be stable and seek progress while maintaining stability, continue to do a good job in the “six stabilities” and “six guarantees”, and be optimistic about next year’s monetary, fiscal and industrial policies. In terms of marginal change, the marginal change of base metals is the largest. We believe that the benefits of base metals are as follows: steel, aluminum, copper, and the continuation of new energy metals policy, which is expected to maintain a long-term high outlook.
Steel industry: fully benefiting from the stable economic policy, the steel industry is expected to reverse at the bottom
As of December 10, the five major varieties of thread, hot coil, medium and heavy plate, cold rolling and wire rod reported 4843 yuan / ton, 4786 yuan / ton, 5090 yuan / ton, 5404 yuan / ton and 5201 yuan / ton respectively this week. The circumferential ratio changed by 0.5%, – 0.7%, – 0.2%, – 0.5% and 0.2% respectively. In terms of social inventory, this week’s social inventory was 9.6279 million tons, down 334400 tons on a weekly basis.
Gross profit per ton of steel rebounded. The gross profit per ton of steel for thread, hot coil, medium and heavy plate, cold rolling and wire rod was 697 yuan, 521 yuan, 804 yuan, 591 yuan and 979 yuan respectively, up 67 yuan, 62 yuan, 70 yuan, 76 yuan and 94 yuan compared with last week.
In the short term, the inventory of high priced raw materials in the hands of iron and steel enterprises has been basically digested, and the cost is at a reasonable position at present. This week, the steel price is still fluctuating, but the profit per ton of steel has recovered significantly. We believe that the “stable steel price and profit growth” in the steel market this week is expected to reflect the future profit logic of the industry. In the medium and long term, the stable economic landing + the improvement of supply-demand relationship + the decline of raw material costs are still optimistic about the high profitability of iron and steel enterprises. At present, the steel sector is in the four bottom stages of policy bottom, low stock price, expected bottom and profit bottom, and is expected to reverse the bottom.
In addition, our first subdivided high-end variety of steel, electrical steel, is the core magnetic material driving modern industry. In particular, high-grade non oriented electrical steel for new energy vehicles has extremely high technical barriers. Baosteel and Shougang master the core technology. Since new energy vehicles can only use high-grade non oriented silicon steel instead of all varieties, the consumption of new energy vehicles will account for 10% of the output of high grades in 2020. In addition, the motor energy efficiency upgrading plan (2021-2023) has been released. The improvement of motor energy efficiency standards will bring a lot of demand for high-grade non oriented silicon steel. It is suggested to pay attention to the main targets of electrical steel: Beijing Shougang Co.Ltd(000959) , Baoshan Iron & Steel Co.Ltd(600019) , Shanxi Taigang Stainless Steel Co.Ltd(000825) , Xinyu Iron & Steel Co.Ltd(600782) , Maanshan Iron & Steel Company Limited(600808) .
Focus on the subject
It is recommended to pay attention to industrial material companies: Beijing Shougang Co.Ltd(000959) , Shanxi Taigang Stainless Steel Co.Ltd(000825) , Xinyu Iron & Steel Co.Ltd(600782) , Maanshan Iron & Steel Company Limited(600808) , Hunan Valin Steel Co.Ltd(000932) , Nanjing Iron & Steel Co.Ltd(600282) , Angang Steel Company Limited(000898) , Baoshan Iron & Steel Co.Ltd(600019) .
It is suggested to pay attention to the construction material companies: Fangda Special Steel Technology Co.Ltd(600507) , Sansteel Minguang Co.Ltd.Fujian(002110) , Sgis Songshan Co.Ltd(000717) .
Special steel plate is recommended to pay attention to: Citic Pacific Special Steel Group Co.Ltd(000708) , Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Fushun Special Steel Co.Ltd(600399) , Jiangsu Toland Alloy Co.Ltd(300855) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) .
Nonferrous Industry: copper and aluminum base metals benefit the most, new energy metals are optimistic for a long time, and magnetic materials benefit from the double carbon policy for a long time
In the rare earth sector, the prices of praseodymium and neodymium oxide, dysprosium oxide and terbium oxide this week were the same as last week, with quotations of 855000 yuan / ton, 2.93 million yuan / ton and 11.02 million yuan / ton. Lithium plate, spodumene quoted us $2310 / T this week, no change; Lithium hydroxide quoted 185500 yuan / ton, up 0.54% from last week; The quotation of battery grade lithium carbonate was 225000 yuan / ton, an increase of 9.76%. The spot supply continues to be tight, the state of continuous low inventory in the industrial chain will remain, and driven by the replenishment of downstream magnetic material enterprises, we expect the price center of rare earth and lithium to continue to rise;
In the magnetic materials sector, the introduction of energy-saving motor policy under the guidance of double carbon and the pull of magnetic materials in the future rapid development of new energy, wind power and photovoltaic. We are optimistic about the pull of rare earth permanent magnet materials under the trend of high efficiency, energy saving and miniaturization of motors, and the pull of the demand for new high-efficiency soft magnetic materials silicon steel and metal soft magnetic powder cores in the new energy era;
In terms of industrial metals, SHFE copper prices rose 0.10% this week to close at 69530 yuan / ton; SHFE aluminum price fell 0.40% to close at 18900 yuan / ton. This week, the number of unemployed people applying for the first time in the United States hit a new low for many years, the economic recovery was strong, the market expectation of the Fed tightening liquidity increased, and the dollar strengthened. There is an inflection point in aluminum inventory, and the accumulated inventory turns to de inventory, but the decline in cost has a negative impact on the price, the cost of coal has decreased, and the current profit of electrolytic aluminum has changed from a small loss to a small profit. Copper inventories remained low and copper supply in South America remained blocked, supporting fundamentals. China’s macro policy shift, the goal of stabilizing the total amount and ensuring demand, is favorable for the reversal of base metal bottoming, and aluminum dominated by China’s supply and demand benefits the most. At the stock level, regardless of upstream mining, beneficiation and metallurgy or midstream processing, the valuation of basic metal related targets has reflected extremely pessimistic expectations. In the future, it is expected to superimpose valuation repair on fundamental repair, and the metal raw material industry will usher in a new round of market.
Focus on the subject
It is suggested to pay attention to magnetic materials: Poco Holding Co.Ltd(300811) , Jl Mag Rare-Earth Co.Ltd(300748) , Hengdian Group Dmegc Magnetics Co.Ltd(002056) , Beijing Shougang Co.Ltd(000959) , Yunlu Co., Ltd;
It is suggested to pay attention to the nonferrous metals sector: China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Qinghai Salt Lake Industry Co.Ltd(000792) , Shenghe Resources Holding Co.Ltd(600392) , Rising Nonferrous Metals Share Co.Ltd(600259) , China Minmetals Rare Earth Co.Ltd(000831) , Aluminum Corporation Of China Limited(601600) , Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Ningbo Jintian Copper (Group) Co.Ltd(601609) , Guangdonghectechnologyholdingco.Ltd(600673) , Kbc Corporation Ltd(688598) , Zijin Mining Group Company Limited(601899) , China Molybdenum Co.Ltd(603993) , Western Mining Co.Ltd(601168) .
Risk tips: the risk of sharp fluctuation in the price of upstream raw materials, the risk that the downstream demand is less than expected, and the risk of continuous spread of overseas epidemic.
