At the aggregate level: the downward trend of real estate remains unchanged. We are at the beginning of the downward cycle of real estate. In the next two years, the beta rate of the steel industry will probably decline. Specifically, in 2022 and 2023, the excess supply and demand of the steel industry will be about 22.25/131.08 million tons respectively, and the steel price center will continue to move down to 4000 / 3500 yuan / ton.
In 2024 and 2025, the marginal supply and demand of steel will ease and the central price of steel will rise. In 2025, there will be another gap between steel supply and demand of about 29.42 million tons, and beta in the steel industry will rise again.
Structural level 1: the crude steel supply structure will be optimized, and the proportion of electric furnace steel will be significantly increased. At present, the proportion of China's electric furnace steel production capacity in the total crude steel production capacity is only 10.4%, while the proportion of the United States, Japan and the world's electric furnace production capacity in crude steel is 69.7%, 24.5% and 27.9% respectively. In contrast, China's crude steel supply structure has great room for optimization. On the other hand, the blast furnace emits 1.5tco2 per ton of steel produced, while the electric furnace emits 0.6tco2 per ton of steel produced. Vigorously developing electric furnace steelmaking is in line with the "double carbon" policy, which is a must choice under the trend of energy transformation.
Structural level 2: the demand structure of crude steel will be optimized, the demand for steel for construction will decline, and the demand for steel for machinery, energy, aerospace and military industry has a large growth space. We estimate that the growth rate of construction steel demand will peak in 2022, and then continue to decline, and begin to show negative growth in 2024. During the 14th Five Year Plan period, the demand for mechanical steel is cagr1 77%, energy steel demand cagr1 27%, aerospace and military steel demand cagr0 9%。 The demand for crude steel will shift from the previous real estate to the manufacturing industry, and the key steel varieties in demand will gradually shift from ordinary carbon steel to high-end special steel. This change in demand structure is consistent with China's pace towards a large high-end manufacturing country.
Core conclusion 1: the background of this round of decline in real estate demand is the high leverage of society, the demand is constrained, the supply has been compressed in advance, and the possibility of loss of the whole industry caused by vicious competition is small. Unlike the passive capacity clearing of the iron and steel industry in 2011-2015 and the current round of real estate downturn, the capacity of the iron and steel industry has been greatly compressed, the possibility of vicious competition in the industry is small, and the concentration of industry capacity is higher.
The demand side is subject to the high leverage ratio of the whole society, and the possibility of adding leverage to boost demand again is also low. Therefore, the rebound range after this round of real estate downward cycle will also be limited.
Core conclusion 2: the demand elasticity of high side manufacturing steel is large, and the relevant targets of emerging racetracks will continue to benefit. In the context of declining total demand, we pay more attention to the investment opportunities of emerging growth demand tracks, such as Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) (002318. SZ) of high-end stainless steel subject benefiting from the booming demand of nuclear power; Upstream new material subject Zhangjiagang Guangda Special Material Co.Ltd(688186) (688186. SH) benefiting from the continuous improvement of wind power installed capacity; 300 series is the leader in the wide stainless steel industry, benefiting from the rapid growth of production capacity and fulfilling the determined stainless steel target Zhejiang Yongjin Metal Technology Co.Ltd(603995) (603995. SH); Superalloy targets benefiting from the boom of military industry include Fushun Special Steel Co.Ltd(600399) (600399. SH), Gaona Aero Material Co.Ltd(300034) (300034. SZ), Jiangsu Toland Alloy Co.Ltd(300855) (300855. SZ).
Risk tip: downstream demand is less than expected, and capacity reduction is less than expected
（ Western Securities Co.Ltd(002673) ）
