In 2022, the iron and steel industry will enter a new cycle of supply side optimization, which is characterized by:
Industry supply and demand peaking: carbon peaking in the iron and steel industry, controlling carbon emissions, superimposing and compressing China's steel theoretical capacity and steel demand into the platform, will drive the industry supply and demand peaking.
Green and low-carbon will accelerate the industry to the survival of the fittest: for iron and steel enterprises, the industry will face energy efficiency improvement, transformation and elimination in the next three years, ultra-low emission transformation and upgrading in the next four years, and the requirement of reaching the peak of carbon emissions in the next nine years. At the same time, the industry will soon be incorporated into the full decarbonization trading market, and the performance cost of high-carbon enterprises may face further increase; These will further drive the evolution of the industry competition pattern: green and low-carbon will accelerate the industry to the survival of the fittest.
Leading state-owned enterprises and large private enterprises will accelerate the integration of the industry and further expand and strengthen it. Since 2021, the policy of mergers and acquisitions in the iron and steel industry has been increasing. As of October 2021, CR10: 42.14%. Compared with the end of 2020, it increased by 3.14 PCT. The merger and reorganization of the industry has been accelerated, and the leading state-owned enterprises and large private enterprises have accelerated the integration of the industry to further expand and strengthen.
Under the dual carbon strategy, the policy orientation does not encourage the export of high carbon emission products such as steel. In 2021, the state adjusted the export tax rebate of iron and steel products twice in a row.
It is estimated that in 2022, steel used in automobile, household appliances and shipbuilding industries will increase, while steel used in construction industry and machinery industry will decrease; China's apparent consumption of crude steel decreased slightly and overseas demand decreased. In 2022, crude steel production decreased by 1.4% year-on-year.
On the whole, the supply side capacity gradually shrinks. Although the demand will decrease slightly in 2022, in the new cycle era, the optimization of the supply side can better adapt to the changes on the demand side and take the initiative to balance. In 2022, in the development pattern with the theme of internal circulation, the demand for steel in the consumption chain is expected to be better than that in the investment and construction chain, and it is expected that the board will be strong, long and weak throughout the year. Under the opportunity of replacing high-end imports, the profits of special steel companies continue to be stable, and the profit center is higher than that of ordinary steel companies.
Investment suggestion: in the new cycle of supply side optimization in the iron and steel industry, green and low carbon are the bonus items of enterprise competitiveness; Leading state-owned enterprises and advantageous private enterprises that become bigger and stronger through merger and reorganization can better meet the competitive requirements under the new cycle. Focus on enterprises that meet the above characteristics and whose product structure is mainly consumption chain steel. Focus on special steel listed companies focusing on high-end products.
Risk tip: there is great pressure on stable macroeconomic growth, China's consumption rebounds slowly, the output of bulk and optional consumer goods such as automobiles is lower than expected, and the demand for plates is weak. Exports declined, and the growth of downstream high-end equipment manufacturing industry was lower than expected, and the demand for special steel slowed down.
