Core view
Under the limited production in winter, the production reduction continues. According to the notice of implementing staggered peak production in iron and steel industry in Beijing, Tianjin, Hebei and surrounding areas issued by the Ministry of industry and information technology and the Ministry of ecological environment on October 13, staggered peak production is implemented in 2 + 26 urban areas such as Beijing, Tianjin, Hebei, Shanxi, Shandong and Henan. The main objectives are: the first stage: November 15, 2021 to December 31, 2021, Ensure to complete the target task of reducing crude steel output in the region. Phase II: from January 1, 2022 to March 15, 2022, with the goal of reducing the increased emission of air pollutants in the heating season, in principle, the proportion of staggered peak production of iron and steel enterprises in relevant regions shall not be less than 30% of the crude steel output in the same period of the previous year. In the province where 2 + 26 city is located, the cumulative pig iron output was 102 million tons and crude steel output was 113 million tons in the first quarter of 2021. The output was reduced by 30%, resulting in a total reduction of 30.68 million tons of iron and 33.85 million tons of crude steel, with an impact ratio of more than 3%. If the air pollutants exceed the standard during the Winter Olympic Games, the production reduction may be exacerbated. The demand for iron ore continued to decline in 22 years.
The peak of overseas demand has passed, and the increment of demand for iron ore is limited. According to the prediction of the world iron and Steel Association, the global steel consumption will be 1.896 billion tons in 2022, an increase of 41 million tons, an increase of 2.2%, a decrease of 2.3 PCT compared with the growth rate of 4.5% in 2021. Among them, the forecast for China is zero growth. If only considering that China's output is limited and reduced by 33.85 million tons in winter, and the output in other times and regions is the same as that in 21 years, the global steel consumption will only increase by 7 million tons in 22 years, and the corresponding increase in iron ore demand will only be about 10 million tons.
From the perspective of global steel mill output, the incremental demand for iron ore is limited, and the iron ore may maintain a bottom shock. With the decline of iron ore and double coke prices, the promotion of the cost end has come to an end, and the production restriction of steel further limits the disturbance of the cost end. Moreover, with the surplus of iron ore, the bargaining power of steel enterprises at the raw material end may be significantly enhanced, and the profits of the industrial chain will be transmitted to the steel end.
At the current time point, the main logic of the steel sector is on the demand side, and the traceable indicators are the steel terminal demand and steel inventory.
1. Real estate underpins expectations, and expected demand bottoms out. On December 10, the central economic work conference mentioned the "virtuous circle" of the real estate industry, which is different from the previous statement only focusing on "promoting the stable and healthy development of the real estate market", releasing a clear signal of rebuilding industry confidence. We expect that the financing related to housing will be thawed gradually, and the reasonable and normal financing needs, land purchase, financing and other business behaviors of real estate enterprises are expected to gradually return to normal. At present, although the demand for steel at the real estate end has not improved significantly, it is only a matter of time for the demand to improve under the expected improvement of real estate policy.
2. At present, the steel inventory has basically fallen back to the level of the same period in previous years. The change on the demand side is mainly reflected in the change of the national policy direction on the real estate side. With the improvement of the demand on the real estate side, the further decline of steel inventory, the superposition of the restrictions on steel output and the improvement of the upstream voice of steel enterprises, the profits of steel enterprises may usher in a high light moment again, The profit per ton may remain high for a long time.
From the perspective of large decline in the early stage, it is suggested to pay attention to Jiangsu Shagang Co.Ltd(002075) , Xinyu Iron & Steel Co.Ltd(600782) , Hainan Mining Co.Ltd(601969) , Beijing Shougang Co.Ltd(000959) , Maanshan Iron & Steel Company Limited(600808) , etc; Focus on Lingyuan Iron & Steel Co.Ltd(600231) , Fangda Special Steel Technology Co.Ltd(600507) , Xinyu Iron & Steel Co.Ltd(600782) , Sansteel Minguang Co.Ltd.Fujian(002110) from the perspective of less impact of production reduction; From the perspective of growth, it is recommended to pay attention to: Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Zhangjiagang Guangda Special Material Co.Ltd(688186) , Citic Pacific Special Steel Group Co.Ltd(000708) .
Risk tip: macroeconomic repair is not as expected; Global inflation is higher than expected; The increase of ore production did not meet the expectation; The development and vaccination progress of covid-19 vaccine was lower than expected.
