On the demand side, we believe that the real estate industry may continue to be under pressure in 2022, dragging down the demand for steel for real estate; The growth rate of infrastructure investment may achieve high single digit growth, which is conducive to the demand for steel for infrastructure. On the whole, the demand for steel in the construction industry is expected to decline slightly by 0.31%. In addition, the demand for steel in the machinery industry may increase by 2%, and the demand for steel in the automobile industry may increase by 7%. In other downstream areas, except for the high growth rate of steel demand in shipbuilding industry, the steel demand in other industries may maintain a low single digit growth. In general, China’s apparent steel consumption is expected to increase by about 1.49% year-on-year in 2022.
On the supply side, looking forward to 2022, in the first quarter, according to the notice of the two departments on carrying out peak shifting production of iron and steel industry in Beijing, Tianjin and Hebei and surrounding areas in the heating season from 2021 to 2022, the goal is to reduce the increased emission of air pollutants in the heating season from January 1, 2022 to March 15, 2022, In principle, the proportion of staggered peak production of relevant iron and steel enterprises in “2 + 26” cities shall not be less than 30% of the crude steel output in the same period of the previous year. We believe that in order to ensure the realization of the medium and long-term “double carbon” goal, as a high-energy consumption industry, the iron and steel industry is expected to continue to control the growth of production capacity and output. It is difficult to have a significant increase in output in 2022, which is expected to be the same as that in 2021.
In terms of inventory, since the beginning of this year, the inventory of the industry has been at a low level compared with the past two years. It is expected that the steel price is expected to rise driven by the demand for subsequent inventory replenishment. At the same time, on the supply side, in order to achieve the “double carbon” goal and continue to consolidate the industry’s de capacity achievements, it is expected that the output of the iron and steel industry this year may be the same as that of last year; On the demand side, driven by infrastructure, automobile, machinery and shipbuilding industries, steel demand is expected to achieve low-speed growth. Therefore, it is not pessimistic about the annual steel price.
In terms of raw materials, the demand for iron ore in 2022 is relatively weak, and the global supply is expected to increase slightly. At present, under the condition of high inventory, the price of iron ore may remain weak; Coke also faces weak demand, and the coke price is expected to depend on the coke coal price. The price of coking coal needs to pay attention to the recovery of imports and the extrusion of coking coal caused by the guaranteed supply of power coal.
Investment suggestion: we believe that the steel output in 2022 may be the same as that in 2021, which has a weak pulling effect on the demand for iron ore and coke, and their prices may remain relatively stable. China’s demand for iron and steel may grow at a low speed, which supports the annual steel price and makes the profits of steel enterprises better. In terms of individual stocks, it is suggested to pay attention to industry leading enterprises Baoshan Iron & Steel Co.Ltd(600019) ( Baoshan Iron & Steel Co.Ltd(600019) ), Hunan Valin Steel Co.Ltd(000932) ( Hunan Valin Steel Co.Ltd(000932) ) dominated by sector products, and special steel leading companies Citic Pacific Special Steel Group Co.Ltd(000708) ( Citic Pacific Special Steel Group Co.Ltd(000708) ).
Risk tip: there is a risk of relaxing the policy of reducing production capacity and output in the iron and steel industry; Steel demand is less than expected risk; The price of raw materials such as iron ore and coke exceeds the expected upward risk; If the assumptions are not tenable, it will affect the risk of judgment conclusion; Natural and man-made disasters and other force majeure events.
