Investment suggestion: continue to be optimistic about steel stocks in the medium term. Against the backdrop of historically high profits and historically low valuations, the industry’s supply ceiling is brought about by output leveling control, and the steady growth supports the recovery of demand. Therefore, we are optimistic about the investment opportunities of cyclical stocks, and the steel sector will also have a good performance. Optimistic about four types of stocks: Inner Mongolia Eerduosi Resources Co.Ltd(600295) , with alpha, and strong performance stocks Hunan Valin Steel Co.Ltd(000932) , Xinyu Iron & Steel Co.Ltd(600782) ; High dividend Fangda Special Steel Technology Co.Ltd(600507) , Baoshan Iron & Steel Co.Ltd(600019) , pay attention to Bengang Steel Plates Co.Ltd(000761) ; High elasticity target Maanshan Iron & Steel Company Limited(600808) , it is suggested to pay attention to Xinjiang Ba Yi Iron & Steel Co.Ltd(600581) , etc.
Industry view: macro expected fluctuation. The impact of the epidemic continued to ferment, adding to the concerns about economic growth at the macro level, resulting in market fluctuations. As a strong stock in the early stage, the steel sector made up a large decline. The performance of short-term high-frequency data is still weak, the demand side remains stable, and the inventory continues to decline, but the overall seasonality is obviously weak. The only bright spot is that exports remain strong, and China’s foreign price difference has remained high recently. After a contraction at the end of March, the gross profit of the industry remained at the level of 600700 yuan / ton, down from the first quarter. On the whole, the judgment of concentrated demand outbreak after the epidemic is still maintained, and the fundamentals of the second and third quarters are still optimistic. Focus on some sub industries with alpha logic, such as ferrosilicon ( Inner Mongolia Eerduosi Resources Co.Ltd(600295) ), and ordinary steel stocks with strong performance, undervalued value and high elasticity Hunan Valin Steel Co.Ltd(000932) , Xinyu Iron & Steel Co.Ltd(600782) , Baoshan Iron & Steel Co.Ltd(600019) , Fangda Special Steel Technology Co.Ltd(600507) , it is recommended to focus on Xinjiang Ba Yi Iron & Steel Co.Ltd(600581) , etc.
Market review: last week (April 17 – April 22), Shenwan iron and steel fell 9.0%, 5.4% behind the Shanghai composite ring. The top gainers are Puyang Refractories Group Co.Ltd(002225) (- 0.3%), Anhui Yingliu Electromechanical Co.Ltd(603308) (- 3.0%), Shanghai Topcare Medical Services Co.Ltd(600532) (- 3.6%). Last week, the prices of main contracts of screw thread, hot coil, iron ore and coke futures changed by – 0.8%, 1.3%, 2.3% and – 3.0% respectively compared with the previous week (April 10-april 15); The profits of deformed steel bar and hot-rolled panel changed by – 25.7% and – 14.8% respectively from the previous week.
Industry trends:
General steel: last week, the social inventory of steel was 16.19 million tons, a month on month decrease of 1.9%; Among them, the long timber inventory was 11.32 million tons, a month on month decrease of 2.4%; Plate inventory was 4.87 million tons, a month on month decrease of 2.7%. In early April, the average inventory of steel mills was 16.62 million tons, a month on month decrease of 2.9%. Last week, the shipment volume of 237 steel traders nationwide was 157000 tons, a month on month decrease of 8.4%; Last week, the cargo volume of Shanghai terminal line snails was 10000 tons, unchanged month on month. The cost lag gross profit of thread, hot rolling, cold rolling and medium and heavy sector tracked are 752, 770, 518 and 743 yuan / ton respectively.
Iron ore: last week, the shipment volume of iron ore from Australia, Pakistan and India was 23.85 million tons, an increase of 3.1% month on month; The arrival volume of 6 ports in the North was 11.83 million tons, an increase of 36.4% month on month. Last week, the iron ore port inventory was 14725 tons, a month on month decrease of 1.0%. Last week, the average daily dredging volume of Port imported mines was 3082500 tons, a month on month decrease of 2.6%.
Coking coal and coke: the start-up of coke enterprises increased last week, the demand for coke is good, and the coke is still strong in a short time. The coal mine operates stably, and the coking coal market operates at a high level.
Ferroalloy: last week, the silicon manganese market was mainly stable, with moderate and strong shocks. The steel plant bidding is about to enter the site, and the ferrosilicon market is running smoothly.
Special steel: last week, the market price of national excellent special steel fell slightly. In terms of price adjustment, steel mills mainly reduced the price. In terms of market, affected by the restriction of automobile transportation in many markets across the country, the transaction was not smooth, the demand increased slowly, but it was still lower than expected. The inventory was obviously accumulated, but supported by the cost of steel mills, the short-term price support was strong. To sum up, the price of the national excellent and special steel market will be weak next week, and the consolidation operation will be dominated.
Stainless steel: last week, the price of nickel ore operated steadily, the chromium ore market showed a good trend, and the spot price of stainless steel showed a narrow range of fluctuation.
Risk tip: real estate fell, and the recovery of manufacturing industry was less than expected.
