In 2022q1, the steel sector fell, and the performance of special steel was weaker. In 2022q1, the epidemic situation in some parts of China affected steel consumption, superimposed on the weak performance of real estate and the weakening of steel price. Among them, the average price of Q1 deformed steel decreased by 4.44% month on month, and the average price of Q1 hot rolling decreased by 1.16% month on month. Superimposed on the strong price performance of raw material end iron ore and scrap steel, the market worried about the damage to the profits of steel enterprises, which dragged down the performance of the steel sector. SW steel fell 6.41% in the single quarter of 2022q1, ranking 12th in Shenwan industry. In terms of breakdown, the performance of special steel is weaker. 22q1 ordinary steel sub sector decreased by 4.44%, and 22q1 special steel sub sector decreased by 10.42%.
The proportion of fund positions in the steel sector continued to decline. From the perspective of institutional positions: 2022q1 fund reduced its holdings of steel stocks, and the allocation proportion of steel sector decreased by 0.21pct to 0.55% month on month. Since 2020q4, with the promotion of “double carbon” and other policies, the focus of steel price has been upward, the superposition industry integration has gradually increased, the improvement of the competition pattern of the steel industry is expected to be strong, and the proportion of steel allocation by the fund has gradually increased, from 0.15% in 2020q3 to 0.80% in 2021q3. However, with the weakening of steel price in 2021q4, the profit expectation of steel sector becomes worse, and the allocation proportion of fund to steel sector continues to decline.
Investment suggestion: pay attention to the opportunities of steel sector brought by the recovery of demand after the epidemic.
1) reduce crude steel production + promote steady growth policies such as real estate and infrastructure construction, and pay attention to the opportunities of steel sector brought by demand recovery after the epidemic. The national development and Reform Commission requires that crude steel output continue to be reduced this year, and steel output is limited. On the demand side, with the gradual development of policies such as standard reduction, real estate relaxation and stable growth of infrastructure, and the gradual resumption of work in Shanghai and other regions, the recovery of steel consumption is expected to be strong after the epidemic, and the steel profit is expected to pick up.
2) ordinary steel sector: pay attention to high dividends and pipe network targets. After the epidemic, there will be a more obvious recovery in the steel consumption rate. If the crude steel output continues to be reduced during the year, the trend of raw material end may be weaker than that of finished products, and the profit recovery of steel sector is expected to be strong. It is suggested to pay attention to Fangda Special Steel Technology Co.Ltd(600507) , Nanjing Iron & Steel Co.Ltd(600282) and so on. In addition, the construction of underground pipe network will be one of the important driving points of infrastructure investment in 2022, and the orders of pipe network are expected to continue to pick up. It is suggested to pay attention to Xinxing Ductile Iron Pipes Co.Ltd(000778) and other targets.
3) special steel sector: focus on targets with high growth. Benefiting from the development of downstream aerospace, marine engineering and other fields, the consumption prospect of special steel is broad. The projects under construction of some special steel enterprises are put into operation in an orderly manner, and the performance is expected to maintain high growth. It is suggested to pay attention to Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Citic Pacific Special Steel Group Co.Ltd(000708) and other subjects.
4) graphite electrode: under the background of double carbon, the demand for moving graphite electrode of electric furnace steel strip is large, and the price of graphite electrode is expected to rise for a long time. Under the background of double carbon, electric furnace steel will usher in great development, driving the demand for graphite electrode. On the supply side, graphite electrode itself is a high energy consuming industry, with limited capacity approval. The inflection point of the industry is gradually emerging, and the price of graphite electrode is expected to rise for a long time. It is recommended to pay attention to the graphite electrode faucet Fangda Carbon New Material Co.Ltd(600516) .
Risk tip: the demand for real estate steel has fallen precipitously; Steel prices fell sharply; The price of raw materials fluctuated sharply.
