Investment summary:
Market review:
As of the closing on January 7, the steel sector rose 2.15% this week, the CSI 300 index fell 2.39%, and the steel sector rose 4.54% ahead of the CSI 300 index. From the sector ranking, the weekly growth rate of the iron and steel industry ranks seventh among Shenwan 31 sectors, with an increase of 2.15% year to date, ranking seventh among Shenwan 31 sectors.
Talk every Monday:
Steel output continues to grow and demand remains sluggish: last Friday, the output of large varieties of steel was + 2.62% (+ 0.47pct) on a weekly basis. According to the prediction of CISC and the existing steel plant production resumption plan, the estimated average capacity utilization rate in January 2022 was about 77% (on a monthly basis + 2.7%, regardless of the Winter Olympic Games and the resumption of production of some Tangshan blast furnaces), The production restriction policy in the second stage of the heating season and the production restriction of the Winter Olympic Games can not prevent the resumption of production in non limited areas; This week, the coke price started the second round of increase, the iron ore continued to rebound, and the steel profit fell somewhat, but it is still on the high side. The short-term high profit may stimulate the steel plant to resume production after the 21-year output limit is lifted; The apparent consumption of the five varieties of steel was + 0.4% (+ 4.16pct) month on month (MOM) and - 7.76% (+ 8.99pct) year on year (YoY). The demand continued to be in a depressed state. Compared with previous years, higher winter storage prices suppressed the enthusiasm of merchants for winter storage; The long-term pessimistic expectation of real estate in the near future has been continuously revised, the intensity of fiscal expenditure has been further improved, and the statement of the national development and Reform Commission on moderately advanced infrastructure investment has promoted the improvement of medium and long-term demand expectation of iron and steel, waiting for the further observation of the pulling effect of the investment side on demand after the festival;
It may be difficult for steel enterprises to maintain high profits for a long time, and pay attention to the growth opportunities of stainless steel, special steel, seamless steel pipe and cast pipe segments: on December 29, the "14th five year plan" for raw material industry development jointly issued by the Ministry of industry and information technology, the Ministry of science and technology and the Ministry of natural resources mentioned that the "14th five year plan" will encourage leading enterprises to implement merger and reorganization, Build a number of world-class super large iron and steel enterprise groups, rely on advantageous enterprises, and cultivate 1-2 professional pilot enterprises in stainless steel, special steel, seamless steel pipe, cast pipe and other fields; This plan and the national industrial and information work conference at the end of last year did not mention the content of limiting the output of crude steel in 2022, and the possibility of continuous administrative production restriction under the guidance of steady growth gradually decreased. From the past data, the continuous growth of steel plant profits is mainly due to administrative production restriction rather than demand side fluctuations, and the subsequent resumption of steel plant production is expected to suppress the profit per ton of steel for a long time, Focus on the growth opportunities of stainless steel, special steel, seamless steel pipe and cast pipe segments and the valuation and repair opportunities of industry leaders;
Market impact: the continuous high profitability of steel or the resumption of production of steel mills, pay attention to the suppression of the weak expectation of administrative production restriction on the profit per ton of steel and the investment performance at the beginning of next year, the stainless steel processing enterprises with anti cycle and growth attribute have significant investment value, and the special steel, seamless pipe and cast pipe enterprises with low valuation have good investment opportunities;
Investment strategy: focus on recommending Zhejiang Yongjin Metal Technology Co.Ltd(603995) stainless steel processing enterprises and Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) pipe processing enterprises with growth potential benefiting from the recovery of manufacturing industry, and recommend Citic Pacific Special Steel Group Co.Ltd(000708) special steel leaders with significant valuation advantages;
Risk tip: policy implementation is less than expected, supply contraction is limited, and demand is less than expected.
