Key investment points
Investment strategy: pay attention to the impact of the central economic work conference on the steel supply and demand environment in 2022. On the demand side, the increase in the weight of steady growth is in line with expectations. However, compared with the greater downward intensity of this round of demand, the hedging of policies in the field of real estate and infrastructure does not show a strong incentive tendency. In the full text of the meeting, the statements of “ahead of schedule” infrastructure and “virtuous circle” of real estate are naturally more positive than before, but real estate is not fried Hard constraints such as “curbing local government implicit debt” are still in place. On the whole, the real estate infrastructure policy has not reached the hedging strength equivalent to the downward level of this round of real estate. On the supply side, under the tone of steady growth, the uncertainty of administrative production restriction will rise. In the steel market, the off-season at the end of the year is approaching, and the demand and transaction will tend to be flat. The focus of the price game will turn to the policy expectation and the demand expectation in the next year. In the short term, the steel price is in the shock repair stage after the sharp decline in the early stage, and in the long term, it will still face the pressure at both ends of supply and demand. It is suggested to look for opportunities in 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 rose 1.63%, the Shanghai and Shenzhen 300 index rose 3.14%, and the Shenwan steel plate rose 0.15%. This week, the main contract of rebar closed at 4538 yuan / ton, with a decrease of 60 yuan / ton on a weekly basis, a range of 1.30%; the main contract of hot rolled coil closed at 4652 yuan / ton, with a decrease of 117 yuan / ton on a weekly basis, a range of 2.45%; The main iron ore contract closed at 635.0 yuan / ton, with a week-on-week increase of 38.0/ton, or 6.37%.
The trend of going to the warehouse continues: the weekly average trading volume of national construction steel this week was 172400 tons, with a month on month decrease of 12500 tons. The social inventory of the five varieties was 9.613 million tons, a month on month decrease of 334000 tons. The central bank’s RRR reduction this week boosted market sentiment to a certain extent. Although the apparent consumption of thread decreased month on month, supported by speculative demand, the trading volume of building materials still showed a trend of slight increase and narrow range fluctuation month on month.
The operating rate of electric furnace decreased for three consecutive weeks: this week, the operating rates of blast furnaces in Mysteel and Tangshan Steel Plant were 46.69% and 39.68% respectively, with a month on month comparison of -1.10pct and -6.35pct last week; This week, the utilization rates of blast furnace capacity of Mysteel and Tangshan Steel Plant were 62.34% and 53.51% respectively, with a month on month comparison of -0.22pct and -6.32pct last week. The operating rate of 71 home appliance arc furnaces this week was 44.90%, with a month on week ratio of -2.26pct; The capacity utilization rate was 48.88%, a month on week increase of + 0.33pct. Driven by the improvement of profitability, steel production increased month on month this week. In terms of production mode, affected by the limited supply of scrap steel and the rising price, the operating rate of electric furnace continues to decline.
Overall stability of steel price: myspic comprehensive steel price index decreased by 0.04% on a week-on-month basis, including 0.25% increase in long materials and 0.40% decrease in plates. Shanghai rebar is 4800 yuan / ton, with a decrease of 10 yuan / ton on a week-on-week basis, with a range of 0.21%. Shanghai hot rolled coil 4820 yuan / ton, an increase of 20 yuan / ton on a weekly basis, an increase of 0.42%. The positive demand margin provides short-term support for steel prices, and it is expected that the short-term steel prices are still dominated by shocks.
The ore price has picked up: this week platts62%106.7 US dollars / ton, the weekly ring ratio increased by 8.2 US dollars / ton, and the price difference between high and low products expanded. Last week, the shipment volume of Australia and Brazil was 24.624 million tons, an increase of 1.852 million tons month on month, and the arrival volume was 10.112 million tons, an increase of 2.143 million tons month on month. The latest steel mill imported ore inventory days are 30 days, an increase of 2 days compared with the last time. Tianjin Zhunyi metallurgical coke was 2710 yuan / ton, a decrease of 0 yuan / ton compared with last week. Scrap steel is 2950 yuan / ton, an increase of 100 yuan / ton compared with last week. Ore prices rose first and then declined this week, but from the actual data, this round of oversold rebound lacks long-term fundamental support. Firstly, the inbound volume and port inventory of imported iron ore at the supply side continue to increase, and for the purpose of impulse at the end of the year, it is expected that the shipment volume of imported ore will still increase. On the demand side, although the steel production increased this week, the hot metal continued to decrease. Therefore, it is less likely that the trend of ore price will be fundamentally reversed.
Slight decline in profit: the profit of mainstream steel fell slightly this week. According to our simulated steel data, the cost side picked up due to the rise in iron ore and scrap prices during the week. The prices of various varieties at the timber end increased slightly. On the whole, the increase of finished product end of each variety this week was less than that of raw material end, and the overall profit was compressed. Among them, the gross profit of hot rolled coil (3mm) increased by 26 yuan / ton, and the gross profit margin increased to 19.78%; the gross profit of cold rolled coil (1.0mm) decreased by 22 yuan / ton, and the gross profit margin decreased to 14.50%; The gross profit of deformed steel bar (20mm) is reduced by 29 yuan / ton, and the gross profit margin is reduced to 22.23%; The gross profit of medium and heavy plate (20mm) is reduced by 56 yuan / ton, and the gross profit margin is reduced to 19.23%.
Risk tip: the sharp decline of macro economy leads to pressure on demand; The pressure at the supply end continues to increase.
