Weak demand and downward adjustment of steel price
The decline in steel prices increased this week, and the rebar fell by more than 100 yuan. The reasons for this adjustment include two aspects: first, with the end of the Winter Olympic Games and the gradual liberalization of production restrictions in Qian'an and other places, the supply of steel and iron increased; Second, the apparent consumption data released by Mysteel is significantly lower than that of the same period in previous years (lunar calendar), and weak demand leads to pressure on steel prices. As we mentioned in last week's report, we need to focus on the marginal changes of terminal demand and environmental protection production restriction at the current stage. From the latest situation, the performance of supply and demand is not ideal, which drives the steel price to fall again. Since "steady growth" is the main line of the government's economic work in 2022, from the early issuance of the amount of special bonds to the recent reduction of the mortgage interest rate and down payment ratio in various places, the signs of infrastructure development and real estate relaxation have been very obvious. With the further promotion of future policies, it is only a matter of time. Therefore, even if the steel demand is difficult to recover to the same period of previous years, the marginal improvement brought by the credit recovery is relatively certain, focusing on the investment opportunities in the subdivided fields with continuous tight supply side, mainly including iron ore, coal coke and other varieties. Although the national development and Reform Commission has severely suppressed the ore price recently, considering that the iron ore supply is dominated by overseas and the increase of overseas shipment volume is limited in 2022, if the hot metal production is significantly repaired in the later stage, the probability of continued sharp decline in ore price is low. In terms of segments, the focus is on the opportunities of water pipe industry, mainly benefiting from Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) , Xinxing Ductile Iron Pipes Co.Ltd(000778) and the upstream material layout opportunities brought by the high boom of oil and gas chain, mainly benefiting from Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) and so on.
Ore prices fell and fluctuated, and coke prices are expected to stabilize
(1) iron ore: the iron ore inventory in port 45 this week was 1603405 million tons, up 255361 million tons month on month; The global shipment of iron ore was 25.911 million tons, down 1.342 million tons on a weekly basis. Among them, the delivery volume of iron ore in Australia was 13.591 million tons, with a decrease of 770000 tons on a weekly basis; Brazilian iron ore shipments were 4.654 million tons, up 87000 tons on a weekly basis. At the same time, the molten iron output of 247 steel plants this week reached 2.0301 million tons, with a decrease of 30300 tons on a weekly basis. Although the iron ore was mainly suppressed by the national development and Reform Commission, the probability of recovery of hot metal production in the later stage is large, the demand for iron ore will usher in a marginal recovery, and the ore price will gradually tend to consolidate after the sharp decline; (2) Coke: the first round of increase in coke has been implemented, and the profit has been repaired, but the center is still low. With the gradual resumption of production of subsequent steel mills, the demand for coke is expected to gradually pick up, and the short-term coke price is expected to be strong.
Plate key data tracking
Demand has gradually warmed up: this week (February 21-february 25), the average trading volume of construction steel in China was 112200 tons, with a week-on-week increase of 37800 tons. According to the calculation of Mysteel data, the apparent consumption of deformed steel bars was 1.89 million tons, with a week on month increase of 244000 tons; The apparent consumption of hot rolled sector and coil was 3.18 million tons, with a week on month increase of 264000 tons;
Supply picked up moderately: the operating rate of blast furnaces in China (247) was 73.44%, with a rise of 3.86pct on a weekly basis; The capacity utilization rate of Tangshan steel plant was 54.17%, and the week on month ratio increased by 2.03pct. The national weekly output of the five varieties was 9.249 million tons, up 388200 tons month on month;
Profit continued to decline: this week (2.21-2.25), the gross profit per ton of rebar was 265 yuan, a month on month decrease of 115 yuan; The gross profit per ton of hot-rolled sector was 265 yuan, down 115 yuan month on month; The gross profit per ton of cold rolled sheet was 147 yuan, down 106 yuan month on month; The gross profit of thick and medium sector decreased by 110 yuan and 225 tons.
Risk tip: terminal demand has fallen sharply, and the environmental protection production restriction policy is less than expected.
