Event: on April 19, the national development and Reform Commission, the Ministry of industry and information technology, the Ministry of ecological environment and the National Bureau of statistics studied and deployed the reduction of national crude steel output in 2022. It is proposed to highlight the key points, distinguish the situation, maintain the pressure, avoid "one size fits all", focus on reducing the crude steel output in key areas of air pollution prevention and control such as Beijing Tianjin Hebei and its surrounding areas, the Yangtze River Delta and Fenwei plain, and focus on reducing the crude steel output with poor environmental protection performance, high energy consumption and relatively backward process equipment level, so as to ensure the year-on-year decline of the national crude steel output in 2022.
Since 2022, China's economy has faced the triple pressure of demand contraction, supply shock and expected weakening. In addition, the epidemic prevention and control in some areas has had an impact on construction and manufacturing production, resulting in the overall soft demand for steel. As of April 15, the annual apparent consumption of rebar, wire rod, medium thick sector, hot rolling and cold rolling was 127.89 million tons, 9.8% less than the same period in 2021 and 7.7% less than the same period in 2019. From the supply side, since March, with the relaxation of production restrictions in the heating season and the Winter Olympic Games, the steel supply has gradually picked up, and the weekly output has increased from 8.7 million tons during the Spring Festival to 9.9 million tons in mid April. With the recovery of supply, the steel stock removal has slowed down since March, the supply and demand has further tended to be loose, and the gross profit per ton of steel has been callback. As of April 15, it is estimated that the average gross profit of rebar in April was 293.5 yuan / ton, a decrease of 232 yuan / ton compared with March; Hot rolling is 430 yuan / ton, a decrease of 280 yuan / ton compared with March; Cold rolling was 420 yuan / ton, a decrease of 296 yuan / ton compared with March.
At the policy level, it is emphasized again that reducing crude steel production this year will further limit the release of supply. With the gradual implementation of the follow-up steady growth policy, the demand side is expected to improve, which will re promote the return of supply and demand to balance and the recovery of gross profit per ton of steel.
Investment suggestion: at present, the overall supply and demand of the steel market is still weak, but the prosperity of the demand (Infrastructure) of some downstream industries is marginally improved; The price of raw materials is strong, the cost pressure increases, the industry has entered a new cycle (carbon control + ultra-low emission + merger and reorganization + not encouraging export), and the competition pattern has improved. This year, the output of crude steel will be reduced at the policy end, and the supply adjustment ability of the superposition industry will be enhanced. The overall supply and demand of steel will be in a dynamic balance, and the profits of enterprises will be supported. It is suggested to allocate two types of Companies: pay attention to the improvement of downstream infrastructure investment margin, resulting in the rebound of demand for pipes and building materials, and focus on reducing relevant companies in non key areas and non key objects. Considering the current low valuation of the steel sector, it is recommended to pay attention to listed companies with high long-term dividend level.
Risk tip: the steady growth of infrastructure investment is lower than expected, and there is little demand for pipes and other steels. Under the internal circulation development pattern, the consumption of durable consumer goods such as automobiles is lower than expected, and the demand for automobile steel is weak
