Output continued to recover slightly and steadily. Last week, the weekly pig iron output of 247 blast furnaces was basically the same month on month, with a slight decrease year-on-year.
The output of five kinds of finished steel products also increased slightly and steadily month on month, but there was still a decrease of about 6% year-on-year. We believe that the recovery of production has slowed down due to the epidemic.
Inventory is slowly removed due to the epidemic. Last week, the factory warehouse decreased by 10000 tons and the social warehouse decreased by 530000 tons, of which the total thread decreased by 320000 tons, and the removal of sector inventory was slower.
The watch needs to gradually decrease and narrow. However, on Friday, the total demand of large steel products still fell by 11%, of which the thread fell by 23%. In the past four weeks, the total decrease was 17%, of which the thread decreased by 30%, the wire rod decreased by 23%, and the sector condition was obviously better.
Profit increased slightly. Last Friday, the profit of large steel was mixed, with a slight decrease in hot rolling and a slight increase in others. We believe that the epidemic has seriously affected demand and profits. According to the law of previous years, March April should enter the peak season of the industry.
Limited production will have a certain effect. In the first half of 2021, the production restriction in Tangshan triggered the first wave of rise in the steel sector, and the production restriction of the Ministry of industry and information technology triggered the second wave of rise in the steel sector in the second half of 2021. We believe that this year’s production restriction at least compressed the potential of disorderly expansion from supply, which is good for the industry. In the first quarter, steel production decreased by 10.50% and nearly 28 million tons.
The output of crude steel in April 2021 was 97.85 million tons, 11% higher than that in March this year. Therefore, we expect that the output in April this year will also decline year-on-year. Therefore, if the target of crude steel production restriction this year is set low, the target of annual production restriction may have been achieved in the first four months.
There is still great hope for the demand after the end of the epidemic. We believe that the epidemic has led to the disappearance of some demand, but the vast majority of demand is only suppressed. It will break out after the epidemic is over. If the inventory and production restriction timing are matched, the steel sector still has a chance.
It is suggested to pay attention to Baoshan Iron & Steel Co.Ltd(600019) , Hunan Valin Steel Co.Ltd(000932) , Nanjing Iron & Steel Co.Ltd(600282) , Beijing Shougang Co.Ltd(000959) , Citic Pacific Special Steel Group Co.Ltd(000708) , etc.
Risk of imported cases: increased risk of overseas epidemic situation and increased risk of policy.
