Core view:
Review in February: the supply and demand of steel is stable, the average prices of long products and sectors have increased significantly, and the gross profit of deformed steel bar, hot coil and cold coil has increased significantly month on month. In February, Shenwan steel sector index rose by 7.91%, ranking sixth among Shenwan 31 industries, outperforming the Shanghai and Shenzhen 300 index by 7.52 PCT The PE and Pb valuations of Shenwan iron and steel sector increased. On February 28, 2022, the pettm and pblf of the iron and steel industry were 9.48 and 1.38 times respectively, ranking 29% and 62% respectively since 2016.
Outlook for March: (1) supply: it is expected that the long-term green and low-carbon development direction will remain unchanged, the policy pressure of short-term environmental protection and production restriction will be reduced, and the supply will rise month on month in March. It is suggested to pay attention to the progress of environmental protection and production restriction policy. (2) Real estate demand: the same as the real estate demand; “Steady growth” supported the improvement of infrastructure steel demand in March on a month on month basis. The demand for automotive steel is expected to increase month on month; Steel for construction machinery needs to maintain toughness on a month on month basis; The demand for steel for household appliances is relatively stable on a month on month basis. The overall steel demand of the manufacturing industry is expected to improve weakly on a month on month basis in March. On the whole, the steel demand is expected to improve month on month in March. (3) Raw materials: the prices of coke and iron ore are expected to be strong and weak respectively in March. It is suggested to pay attention to maintaining supply and stabilizing prices and overseas monetary policies. It is expected that in March, the steel supply will rise month on month, the demand will improve month on month, the steel supply and demand will improve, the cost support will be weak, and the steel price is expected to strengthen. The prices of coke and iron ore are strong and weak respectively, the profit of steel is expected to rise, and the valuation of steel sector is expected to be repaired. Focus on the high-quality leaders of ordinary steel with good environmental protection foundation, variety advantages and strong cost control ability: Baoshan Iron & Steel Co.Ltd(600019) , Hunan Valin Steel Co.Ltd(000932) , Beijing Shougang Co.Ltd(000959) , Xinyu Iron & Steel Co.Ltd(600782) , Nanjing Iron & Steel Co.Ltd(600282) , Fangda Special Steel Technology Co.Ltd(600507) , Sgis Songshan Co.Ltd(000717) , etc.
High quality special steel leaders with weak cycle, high-end product structure and flexible production capacity: Citic Pacific Special Steel Group Co.Ltd(000708) , Yongxing Special Materials Technology Co.Ltd(002756) , Fushun Special Steel Co.Ltd(600399) , Gaona Aero Material Co.Ltd(300034) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Jiangsu Changbao Steeltube Co.Ltd(002478) , etc.
Fundamental analysis: the supply and demand pattern of steel was stable in February, and it is expected that the “steady growth” in March will promote the improvement of supply and demand. (1) Supply: it is estimated that the average daily output of crude steel decreased month on month in February, and the output of crude steel is expected to increase month on month in March. (2) Demand: it is estimated that the steel demand will weaken from December 2021 to February 2022, and the demand is expected to improve in March 2022. (3) Inventory: the inventory of long materials and sectors increased significantly month on month in February, and the steel inventory is expected to decline in March. (4) Cost: it is estimated that the supply and demand pattern of imported iron ore and coke in March is weak and strong respectively. (5) Steel price: in February, the average price of long materials and sectors increased significantly, and the steel price is expected to strengthen in March. (6) Profit: the gross profit of deformed steel bar, hot coil and cold coil increased significantly month on month in February, and the profit of steel in March is expected to improve.
Risk warning: macroeconomic fluctuations exceed expectations; Global monetary policy exceeded expectations; The output of iron ore, coking coal and coke did not meet expectations; Environmental protection and production restriction exceeded expectations.
