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The Ministry of industry and information technology and other departments recently issued the “14th five year plan” for the development of raw material industry. The development objectives include: by 2025, the production capacity of key raw materials and bulk products such as crude steel and cement will only be reduced but not increased, and the capacity utilization rate will remain at a reasonable level. The comprehensive energy consumption per ton of steel in the iron and steel industry decreased by 2%, the energy consumption per unit clinker of cement products decreased by 3.7%, and the carbon emission of electrolytic aluminum decreased by 5%. Study and establish a restraint mechanism to curb the expansion of excess capacity by means of carbon emission, pollutant emission and total energy consumption. We will implement normal peak shifting production of cement and explore the establishment of peak shifting production mechanism in iron and steel industries. Implement energy conservation review and strictly control the fuel coal consumption of major coal consuming industries such as petrochemical industry, steel industry and building materials.
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The high-end level of supply has been improved, and the industrial structure has become more reasonable. China has continuously increased R & D investment in key industries, and breakthroughs have been made in key basic materials and technologies in key strategic areas. The plan proposes that the production capacity of key raw materials and bulk products such as crude steel and cement will only be reduced but not increased, leading enterprises in the industrial chain are expected to form, and more than five world-class advanced manufacturing clusters will be formed in the field of raw materials. At the same time, with the continuous clarification of the dual control route of energy consumption, the green level of industrial development has also been greatly improved. The target is clear that the comprehensive energy consumption per ton of steel will be reduced by 2%, the energy consumption per unit clinker of cement products will be reduced by 3.7%, and the carbon emission of electrolytic aluminum will be reduced by 5%, which reflects that the emission intensity and total amount of pollutants per unit output value of key industries will be reduced. The comprehensive utilization rate of solid waste such as industrial waste residue was further improved.
Iron ore and double coke prices are expected to decline, and the bargaining power of steel enterprises is expected to rise. On the supply side, China’s iron ore supply mainly comes from overseas. At present, overseas mining enterprises have a relatively strong incentive to increase production. China continues to make efforts in ensuring the safety of iron ore. China’s port iron ore is 155 million tons, and the current inventory is close to the highest point in five years. Considering the continuous production restriction policy next year, it is expected that the inventory will continue to rise, The future market probability of iron ore prices will be weak. With the future downward trend of iron ore and double coke prices, the cost side’s promotion of finished product prices will gradually weaken, and the recovery of infrastructure demand is now a high probability event. It is expected that the demand side of steel will be boosted, and the bargaining power of raw material side of steel enterprises will be improved in the later stage.
The profit center of the steel industry is expected to boost, and the sector has investment opportunities. At present, the valuation of the steel sector is still relatively low. With the reduction of the cost side and the improvement of the real estate data, the enterprise production cost has improved significantly, the enterprise profit margin will maintain the expansion trend, and the industry profit center is expected to be boosted. We judge that according to the current instructions for the production restriction policy, the industrial chain profit is expected to usher in redistribution, which has a positive impact on the reconstruction of industry valuation, and the investment opportunities in the steel sector still exist. On the one hand, we can pay attention to high-end electrical steel targets with high technical barriers and strong profitability, such as Baosteel and TISCO; On the other hand, it is suggested to focus on providing high-end special steel materials for military aviation with strong fundamentals, such as Yongxing Special Materials Technology Co.Ltd(002756) , Fushun Special Steel Co.Ltd(600399) .
