Introduction to this report:
In the past 22 years, the steel demand has strong toughness, and the steady growth will help the demand repair, and the sector will usher in the repair market. We believe that carbon neutralization is a major theme for industrial products in the next 5-10 years. The 21-year steel production capacity cycle has basically ended and a new cycle for the sector has begun.
Summary:
“Steady growth” helps repair steel demand. Last Friday, the social stock of large varieties of steel decreased by 359700 tons, the factory stock increased by 286900 tons, and the total inventory decreased by 72800 tons; Among them, the social warehouse of deformed steel bar decreased by 228500 tons, the factory warehouse increased by 154700 tons, the hot rolling social warehouse decreased by 51600 tons and the factory warehouse increased by 48200 tons. On Friday, the apparent consumption of large varieties of steel was 962.08 tons, down 396200 tons. The recent multi-point outbreak of the epidemic has affected the delivery and logistics transportation of local steel mills to varying degrees, and the recovery of downstream demand in the short-term peak season has been adversely affected. According to the data of the National Bureau of statistics, the cumulative infrastructure investment (excluding electricity) increased by 8.1% year-on-year in the first two months of 22 years, 7.7 percentage points higher than the year-on-year growth of 21 years; The cumulative manufacturing investment grew by 20.9% year-on-year, 7.4 percentage points higher than the year-on-year growth of the whole year of 21. Under the background of the “steady growth” policy, infrastructure and industrial investment exceeded market expectations. In the later stage, as the “steady growth” continues to develop, the demand for steel is expected to gradually pick up. Undervalued and high dividends, combined with the optimization of the industry competition pattern, highlight the opportunities of the sector.
Last Friday, the weekly output of large varieties of steel was 9.548 million tons, a month on month increase of 194000 tons over the previous week and a year-on-year decrease of 7% over the same period last year. Last week, the blast furnace operating rate of 247 steel mills nationwide was 78.91%, up 8.06 percentage points from the previous week; The operating rate of electric furnaces in China was 67.95%, up 1.28 percentage points from the previous week.
According to the data of the National Bureau of statistics, from January to February, the national crude steel output was 157.96 million tons, a year-on-year decrease of 10%; The average daily output of crude steel in China was 2.6773 million tons, a year-on-year decrease of 9.7%. In the short term, based on the “steady growth” and the release of production restrictions on March 15, the steel supply will rise marginally. However, in the medium and long term, we believe that the requirement of prohibiting new production capacity in the steel industry will continue, the growth space of steel output is limited, and the logic of long-term prosperity of the industry has not changed.
Last week, the profits of thread and hot coil simulation production were 414 and 174 yuan / ton respectively. From the cost side, in the short term, considering the conflict between Russia and Ukraine and the resumption of production of steel mills, we believe that the profits of steel mills will be under pressure. However, for the whole year, it is estimated that the iron ore increment of the four major mines and non mainstream mines in 22 years is about 40 million tons, and the port inventory is still at a relatively high level. Therefore, we expect the iron ore price center to return to a reasonable range in the later stage; At the same time, in terms of coke and coking coal, considering the continuation of the “guaranteed supply” policy, we believe that the worst situation on the supply side has passed. Overall, we expect that the cost side pressure of steel mills is expected to gradually improve, and the profits of steel mills will gradually pick up in the later stage.
Maintain the “overweight” rating. Recommend low-cost and strong management of ordinary steel faucets Fangda Special Steel Technology Co.Ltd(600507) , Sansteel Minguang Co.Ltd.Fujian(002110) , Baoshan Iron & Steel Co.Ltd(600019) , Hunan Valin Steel Co.Ltd(000932) , Beijing Shougang Co.Ltd(000959) , Xinyu Iron & Steel Co.Ltd(600782) , etc; Benefiting from the upgrading of manufacturing industry and import substitution, recommend special steel leaders Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Citic Pacific Special Steel Group Co.Ltd(000708) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) Fushun Special Steel Co.Ltd(600399) , Zhangjiagang Guangda Special Material Co.Ltd(688186) waiting for performance inflection point. In terms of new materials, the proportion of electric furnace steel has increased. Graphite electrode leader Fangda Carbon New Material Co.Ltd(600516) , liquid flow battery energy storage development, leader Pangang Group Vanadium Titanium & Resources Co.Ltd(000629) , lithium carbonate price remains high, transformation of lithium battery standard Yongxing Special Materials Technology Co.Ltd(002756) , rare earth ore leader Inner Mongolia Baotou Steel Union Co.Ltd(600010) , carbonyl iron powder leader Jiangxi Yuean Advanced Materials Co.Ltd(688786) ; The construction of underground pipe gallery and pipeline ushers in an opportunity period. Pipeline leaders Xinxing Ductile Iron Pipes Co.Ltd(000778) , Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) , Tianjin You Fa Steel Pipe Group Stock Co.Ltd(601686) , are recommended.
Risk tip: the production restriction policy was relaxed more than expected, and the industry demand fell more than expected.
