Investment strategy: Iron and steel has entered the off-season of demand, the weekly demand and transaction have weakened, and the year-on-year decline has expanded. According to the recent survey and feedback of the steel market, traders' willingness to store in winter is low, mainly due to the high absolute price of steel, concerns about the limited profit space or price decline risk in the peak season, and some traders reduce the annual agreed volume, which may lead to the increase of the proportion of self storage of steel enterprises this winter. In January, Chinese steel enterprises are expected to resume production in stages. If traders' willingness to store in winter remains depressed during this period, it may lead to pressure on steel prices in the off-season. For the demand in the peak season of next year, although there is the expectation of infrastructure moving forward, the real estate uncertainty is still large, and the demand is still lower than expected. In the medium term, we tend to believe that the downward cycle of this round of steel demand has not been completed. It is suggested to look for opportunities in the growing new material industry and pay attention to Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Zhangjiagang Guangda Special Material Co.Ltd(688186) , Fushun Special Steel Co.Ltd(600399) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Yongxing Special Materials Technology Co.Ltd(002756) , etc.
One week market review: this week, the Shanghai Composite Index rose 0.60%, the Shanghai and Shenzhen 300 index rose 0.39%, and the Shenwan steel plate rose 2.42%. This week, the main contract of rebar closed at 4550 yuan / ton, with a decrease of 148 yuan / ton on a weekly basis, with a range of 3.15%; the main contract of hot rolled coil closed at 4700 yuan / ton, with a decrease of 95 yuan / ton on a weekly basis, with a range of 1.98%; The main iron ore contract closed at 633 yuan / ton, with a decrease of 75 yuan / ton, or 10.59%.
The speed of going to the warehouse slowed down: the weekly average of the national construction steel trading volume this week was 140600 tons, a month on month decrease of 12400 tons. The social inventory of the five varieties was 8.733 million tons, with a month on month decrease of 36800 tons. This week, with the significant drop in the national temperature and the approaching of the new year in January, the construction on the construction site slowed down, coupled with the generally high price of winter storage, traders mainly wait-and-see, and the trading volume and apparent consumption of building materials entered the downward channel. At the same time, the speed of social Treasury going to the warehouse has slowed down significantly this week, the factory warehouse has increased year-on-year, and the inventory inflection point may have arrived.
Improvement of blast furnace production level: this week, the blast furnace operating rates of 247 Mysteel steel enterprises and Tangshan Steel Plant were 70.04% and 39.68% respectively, with a month on week increase of + 2.17pct and + 2.38pct; This week, the blast furnace capacity utilization rates of mysteel247 steel enterprises and Tangshan Steel Plant were 75.79% and 54.94% respectively, with a month on week increase of + 1.46pct and + 3.15pct. The operating rate of 71 home appliance arc furnaces this week was 44.74%, with a month on week increase of + 0.14pct; The capacity utilization rate was 47.21%, down from -1.67pct last week. In terms of environmental protection this week, Tangshan and Handan have lifted the emergency response to heavily polluted weather. Although some steel mills have issued production restriction plans, under the condition of considerable profitability, steel enterprises generally have an increased willingness to resume production, and the steel output is increasing month on month.
Steel prices continued to decline: the myspic comprehensive steel price index decreased by 1.96% on a weekly basis, including 2.21% for long materials and 1.66% for plates. Shanghai rebar 4760 yuan / ton, a decrease of 110 yuan / ton on a weekly basis, an increase of 2.26%. Shanghai hot rolled coil was 4860 yuan / ton, with a decrease of 70 yuan / ton, an increase of 1.42%. Steel prices continued to decline this week, mainly due to the expectation of increased supply in the market and weak trading sentiment with the entry of the traditional demand off-season in January. Steel prices are expected to remain weak next week.
Ore price drop: platts62%117.25 US dollars / ton this week, a decrease of 7.8 US dollars / ton on a weekly basis, and the price difference between high and low products expanded. Last week, Australia and Brazil delivered 25.157 million tons, an increase of 2.511 million tons month on month, and the arrival volume was 11.013 million tons, an increase of 396000 tons month on month. The latest steel mill imported ore inventory days are 30 days, an increase of 2 days compared with the last time. Tianjin Zhunyi metallurgical coke was 2710 yuan / ton, unchanged from last week. Scrap 3120 yuan / ton, 40 yuan / ton less than last week. This week, the ore price was first depressed and then raised. From the fundamental point of view, the supply and demand of iron ore has improved. Driven by profits, steel enterprises have resumed production one after another, and the hot metal output and port inventory have turned. It is expected that the short-term iron ore price will mainly fluctuate in a narrow range.
The decline of profit slowed down month on month: the profit of mainstream steel continued to decline this week, but the speed slowed down. According to our simulated steel data, during the week, the price of iron ore and scrap turned from increase to decrease, and the cost of billet decreased. At the same time, the average weekly price at the finished end decreased and the decline exceeded the decline at the raw material end, and the profit per ton of steel fell as a whole. Among them, the gross profit of hot rolled coil (3mm) decreased by 52 yuan / ton, and the gross profit margin decreased to 15.33%; The gross profit of cold rolled sheet (1.0mm) is reduced by 11 yuan / ton, and the gross profit rate is reduced to 11.14%; The gross profit of deformed steel bar (20mm) is reduced by 41 yuan / ton, and the gross profit margin is reduced to 17.71%; The gross profit of medium and heavy plate (20mm) increased by 19 yuan / ton, and the gross profit margin decreased to 14.96%.
Risk tip: the sharp decline of macro economy leads to pressure on demand; The pressure at the supply end continues to increase.
