Main points:
This week, the Shanghai Composite Index fell by 1.25% and the Shanghai and Shenzhen 300 index fell by 0.99%. The steel sector fell by 0.89%; Among the sub sectors, the ordinary steel sector increased by 0.46%, and the special material sector decreased by 4.41%.
Steel market: logistics dredging is conducive to the resumption of work, and the steel price is expected to rebound
The improvement of China’s epidemic situation and the breaking of traffic congestion are conducive to the resumption of work in April. It is expected that the steel demand may increase rapidly in the second quarter. At present, some raw materials are difficult to enter the market due to the epidemic, and the steel mills in the Northeast market have relatively large inventories, but the demand is general. There is downward pressure on the steel price, but the decline space and duration are limited. It is expected to rise in early May. As of April 15, the total scrap inventory of steel mills represented by 15 parents and short processes was 873800 tons, down 0.94% from last week; The average daily arrival volume of scrap steel was 461333 tons, an increase of 5.81% over last week; The average daily consumption was 482000 tons, an increase of 5.09% over last week. Due to the multi-point spread of the epidemic, the transportation capacity of steel mills to traders’ warehouses and warehouses to end users is limited, resulting in the weak release of steel demand. As of April 15, the steel inventory of key steel enterprises reached 18.48 million tons, a new high since late March 2020; As of April 15, the social inventory of steel in 29 key cities was 15.191 million tons, down 386000 tons or 2.5% from last week. The epidemic has restrained the demand in East China and other places, but the main theme of the industry is still the increase in demand caused by the steady growth of real estate infrastructure. At present, the valuation level of the sector is low, and the steel demand may show a pulse recovery trend after the epidemic is alleviated. Steel prices fell slightly this week, the spot price of rebar fell by 0.20%, and the spot prices of hot rolling, cold rolling and medium sector remained unchanged. See the breakdown categories specifically: in terms of hot-rolled sector and coil, the epidemic restricts the regional flow, the superimposed demand has not improved significantly, and the transmission to the terminal area is not smooth. The spot price fluctuates and rises this week, while the average price is lower than last week; In terms of scrap steel, the epidemic spread, production and logistics were blocked, and the broken material market fell slightly this week; Transportation constraints superimposed on profit contraction, and scrap steel prices in Beijing Tianjin Hebei market fell first, then stabilized and then strengthened; In terms of double coke, this week’s output of coking coal was reduced due to poor transportation. It is expected that the output will decline steadily in the later stage. The reduction of output forms a negative feedback on the demand for coking coal. There is a shortage of total inventory and structure, and coke enterprises have a strong willingness to replenish inventory; This week, the output of coke decreased due to the shortage of raw materials, and the transportation was blocked. The output reduction will be further expanded. The epidemic will limit the downstream demand for steel. Under the expectation of national steady growth, the logistics may be improved to resume production. The policy stimulus still has the potential to be transformed into actual demand.
In terms of special steel, under the guidance of high-quality development policy, subdivision tracks such as pipeline and steel structure deserve attention. From the perspective of new infrastructure construction, China’s pipelines have entered the upgrading stage. The construction of water supply and drainage systems in rural areas is rough, and the construction of sponge pipe networks in cities and towns is also imminent. It is recommended to pay attention to 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) . As the core metal material in the field of new energy vehicles, electrical steel is also a sector worthy of attention. The rapid development of new energy vehicles has driven the downstream demand for electrical steel. At present, the valuation of the sector is generally not high, and it is optimistic about the electrical steel sector for a long time. It is suggested to pay attention to Baoshan Iron & Steel Co.Ltd(600019) , Maanshan Iron & Steel Company Limited(600808) , Beijing Shougang Co.Ltd(000959) , etc.
The price of rebar in the spot market this week was 508000 yuan / ton, with a weekly decrease of 0.20%; The price of hot rolled coil is 521000 yuan / ton, unchanged from last week; The price of cold rolled coil is 566000 yuan / ton, unchanged from last week; The price remained unchanged at 5250 yuan / medium sector last week. In the futures market, the active contract price of rebar was 504900 yuan / ton, with a weekly increase of 0.60%; The active contract price of hot rolled coil was 519800 yuan / ton, with a weekly increase of 0.06%; The active contract price of wire rod was 555200 yuan / ton, with a weekly increase of 2.10%. The myspic composite steel price index was 189.70 points, with a weekly decline of 0.34%, of which the myspic long material index fell 0.22% and the myspic flat sector index fell 0.48%.
Raw material Market: the reduction of coking coal production has a negative feedback on demand, and the willingness to replenish coke inventory is strong. As of Friday, the price of Pb powder in Australia in the spot market was 100800 yuan / ton, with a weekly increase of 0.30%; The price of primary metallurgical coke was 391000 yuan / ton, with a weekly increase of 5.39%; The price of main coking coal was 330000 yuan / ton, unchanged from last week. In the futures market, the active contract price of iron ore was 915.50 yuan / ton, with a weekly decline of 0.33%; The contract coke price was 399800 yuan / ton, with a weekly decrease of 1.50%; The active price of coking coal was 315200 yuan / ton, with a weekly decline of 1.93%. This week, some demand was released due to the relaxation of epidemic prevention and control, but it was still limited to some regions, resulting in insufficient market speculation power and interfering with the price within the week. The regional traffic dredging brought power to the market speculation. After the market rose, the transaction follow-up was slightly insufficient, some quotations were slightly loose, and the mainstream remained stable and wait-and-see; The supply side changed little. Affected by the high price of raw materials and the high inventory pressure in the plant, the blast furnace operating rate of the steel plant decreased slightly this week.
Steel supply and demand: the epidemic curbed steel demand, output recovered rapidly and slowed down the decline of inventory. In terms of steel mill inventory this week, cold rolling, hot rolling, wire rod, medium and heavy sector and rebar increased by 3.05%, 4.87%, 1.94%, 3.65% and 7.13% respectively. In terms of steel output this week, the output of hot rolling and wire rod increased by 0.58% and 3.66% respectively, and the output of cold rolling, medium and heavy sector and thread decreased by 0.02%, 2.10% and 0.80% respectively. At the beginning of this week, the expected cashing pressure was large, but the reality was weak. The market was weak, and the sharp decline of futures led to the decline of spot prices. The market hyped again with the digestion of bad news. It is expected that the policy will continue to work under the support of cost side and economic pressure. Combined with the rebound expectation after the disk oversold, there was spot bottoming, and the Bulls once again gained the upper hand, driving the price up.
Investment advice
With the recovery of manufacturing demand superimposed on the background of carbon peak and carbon neutralization, the profit logic of the steel industry has been reconstructed, and steel enterprises have further benefited from the cyclical rotation. We are still optimistic about the steel sector for a long time. The national defense, military industry and aerospace industry have a broad domestic substitution space, and products such as superalloy, special stainless steel and ultra-high strength steel occupy an absolute dominant position. It is suggested to focus on the performance of the interim report and the leader of special steel in fulfilling the industry’s high vision: Fushun Special Steel Co.Ltd(600399) ; Traditional field leaders + popular emerging business targets are more favored by the market. It is suggested to focus on stainless steel rods and wires and mica lithium extraction leaders: Yongxing Special Materials Technology Co.Ltd(002756) ; And the high growth leader in the field of cold-rolled stainless steel: Zhejiang Yongjin Metal Technology Co.Ltd(603995) .
Risk tips
Covid-19 epidemic situation is repeated; The economic downturn accelerated; The price of raw materials fluctuates greatly; The demand for real estate steel fell sharply; Steel destocking process is blocked.
