Iron and steel: after the central government lowered the lower limit of the first house mortgage interest rate on the 15th, the interest rate cut was implemented on Friday, and the LPR over five years was reduced by 15 basis points, reflecting the government’s determination to stabilize real estate. The strength of steady growth monetary policy boosted market confidence to a certain extent, and steel prices stopped falling and rebounded slightly on Friday. On the cost side, the third round of coke lifting and lowering was completed, with a cumulative decrease of 600 yuan / ton, and the billet cost further decreased. This week, the production of blast furnace was flat month on month, the production level of electric furnace continued to decline under the continuous loss, and the total output of steel decreased significantly month on month. Under the contraction of supply, the apparent consumption has not been raised, and the situation of weak supply and demand is obvious. In terms of import and export, the growth rate of external demand in April was lower than expected. In May, with the gradual digestion of the phased shortage of supply and demand caused by the conflict between Russia and Ukraine, coupled with the pressure on commodity prices under the interest rate increase of the Federal Reserve, overseas steel prices rose and fell. It is expected that the phased recovery of external demand for steel may end in the first half of the year.
Coal: higher price ceiling and more stable operating performance. Coal price: the price of power coal is strong, and the price of coking coal is falling. In terms of thermal coal, the port price is stable this week, and the pit price is strong. On the supply side, the supply in the main production areas has been slightly tightened, the sales are good, there are many queues for coal pulling vehicles, the long-term insurance association has led to tight coal sources in the market, strong prices, and some coal mines have been interviewed for price increases; In terms of ports, the shipping cost is high, the price difference between offer and counter-offer is large, and there are few transactions. The purchase is mainly made by non power coal users, and the price is stabilizing; The international coal market demand is good, and the price of imported coal is still high. On the demand side, the daily consumption of the power plant is reduced, and the overall demand is still weak. Near the end of the month, the coal management ticket at the origin began to be tight, and the downstream demand is expected to improve. Some traders are expected to be bullish. In the follow-up, they will continue to pay attention to the resumption of production and work and the demand for replenishment at the downstream. In terms of coking coal and coke, prices fell. On the supply side, the coal mines that stopped production basically returned to normal, the supply continued to increase, there were certain purchases in the downstream, and the increase of inventory in the mine slowed down; In terms of importing Mongolian coal, the average daily customs clearance of Ganqi Maodu port was 375 vehicles on the 4th of this week, with an increase of 77 vehicles on a weekly basis. The downstream procurement was cautious, and the price of Mongolian coal continued to fall; On the demand side, the downstream procurement has improved slightly, but after three consecutive rounds of coke price reduction, the profit has been significantly compressed, and some began to limit production, while the profit of steel mills has not been repaired, and the willingness to purchase is not strong. Downstream real estate has the expectation of marginal relaxation, and we still need to continue to pay attention to the terminal demand. Investment suggestion: it is expected to improve and the upward attack is imminent. The expectation of the improvement of the epidemic situation and the recovery of demand is becoming stronger, and the price of thermal coal is strong. Although the implementation of the coal long-term association and price monitoring are stricter in terms of policy, the price space is higher than expected, which is still favorable; Coking coal still needs to observe the actual impact of real estate relaxation. Overall, the supply and demand pattern of coal is still tight, and the prosperity of the industry will remain high. The growth rate of coal enterprises’ performance in the first quarter is generally fast, and the improvement of performance in the second quarter is expected to continue to exceed the expected performance; The high proportion of dividends of listed companies reached a new high since listing, boosted market sentiment and continued to be optimistic about the future market. It is suggested to focus on the target: power coal company Shaanxi Coal Industry Company Limited(601225) , Shanxi Coal International Energy Group Co.Ltd(600546) , Yankuang energy, China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) ; Coking coal company Shanxi Lu’An Environmental Energydev.Co.Ltd(601699) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Huaibei Mining Holdings Co.Ltd(600985) , Shanxi Coking Coal Energy Group Co.Ltd(000983) , Guizhou Panjiang Refined Coal Co.Ltd(600395) , Shanghai Datun Energy Resources Co.Ltd(600508) .
Nonferrous Metals: China’s logistics pressure eased, steady growth further strengthened, and the rebound continued. 1) The Fed issued “partial Hawk” remarks, and the rising recession expectation supported the price of precious metals. In a hawkish speech this week, Fed chairman Powell said that interest rates would be raised above neutral levels if necessary to deal with inflation. Market worries about the US recession increased. During the week, the US dollar turned from up to down, supporting the price trend of gold and silver. As of May 20, Comex gold closed at US $184210/oz, up 1.87% month on month; COMEX silver closed at US $21.674/oz, up 3.20% month on month; SHFE gold closed at 397.18 yuan / g, down 0.62 month on month; SHFE silver closed at 4775 yuan / kg, up 3.15% month on month. 2) The problem of metal price growth and basic support will be further alleviated. During the week, the Fed said it would maintain a radical pace of interest rate hikes to curb inflation until inflation reached 2%. Radical remarks exacerbate market concerns about recession; In China, the epidemic situation in China has eased, the logistics and transportation problems have been further alleviated, and the resumption of work and production in China continues to be promoted. At the same time, China has lowered the five-year LPR to boost market confidence. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose and fell by 2.3%, 5.0%, 4.0%, 4.7%, 0.9% and 1.1% respectively this week, and the price rebounded as a whole compared with last week.
Building materials: since April, the economic growth has been under pressure due to the downturn of real estate and repeated epidemics. The social finance data is lower than expected. The infrastructure underpinning economy still needs to be strengthened. The joint improvement of both sides of real estate supply and demand is expected to be strengthened. This five-year LPR reduction is a further overweight of the real estate easing policy. We expect that the inflection point of new housing sales will gradually approach and the bottom of the real estate chain will be further consolidated. At the current time, we suggest paying attention to several main lines of investment in building materials & new materials. First, the prosperity and performance fulfillment are selected from carbon fiber, quartz sand and glass fiber industries; Second, the marginal improvement of real estate policy, focusing on the layout of brand building materials; Third, cement and water reducing agent are selected for the main line of steady growth; Fourth, at the bottom of the photovoltaic glass industry cycle, with the support of cost, the industry basically has no downside risk; Float glass prices stabilized and rebounded while demand boosted. 1) In the field of new materials, the “limited overseas supply”, the explosion of demand in new energy fields such as wind, light and hydrogen downstream of carbon fiber, and China’s leading “grinding a sword in ten years”; Domestic leaders have finished catching up. In the future, capacity expansion and cost reduction will lead to surpassing in the civil field; In addition, we believe that the business continuity in the field of small and medium-sized tow is high, and the supply and demand pattern of precursor will be better than that of carbon fiber. High purity quartz sand / electronic cover glass ushered in the industrial opportunity of high demand increase + domestic alternative resonance, and UTG welcomed the outbreak of demand. 2) The glass fiber cycle is weakened, the roving boom is expected to continue (wind power, automobile, export, etc. bring strong support to the demand), the bottom of the price of electronic cloth has appeared, which is expected to continue to pick up, and the current safety margin is high. 3) The layout of brand building materials is at the right time. Since the second half of the year, the valuation and performance of brand building materials have been killed under weak demand + capital pressure + high cost. In the absence of significant improvement in real estate fundamentals, the policy continued to relax expectations, the credit risk faced by the real estate chain and the pessimistic expectation of market demand were repaired, and the sector rebounded as a whole. According to the historical resumption, the end of the general real estate policy corresponds to the end of the valuation of brand building materials. The end of this round of policy / valuation appears in 21q4. We expect the end of fundamentals to appear in 22h1. 4) The cost performance of cement allocation is high. The infrastructure development force and the marginal recovery of real estate under steady growth are expected to support the cement demand to maintain a high platform. However, the further coordination and optimization of cement core logic at the supply side in 22 years has generally strengthened the scope and intensity of peak staggering this year than last year, superimposing the high price center to maintain profitability and toughness. 5) From the perspective of water reducing agent, capital construction pull + gross profit margin rise + functional materials open up growth space. 6) The bottom price of photovoltaic glass is still upward flexible. The price continues to rise this week. We are optimistic about the adverse expansion and cost competitiveness of leading enterprises, and focus on the profit elasticity and long-term growth brought by the expansion of traditional glass into the field of photovoltaic glass; The price of float glass has been adjusted at a low level, and the price is expected to stabilize and recover with the gradual recovery of demand.
Chemical industry:
Grasp the investment opportunities in the new cycle of crude oil:
In the context of global carbon neutrality, the game between supply and demand will bring crude oil into a new cycle.
From the supply side, under the background of global carbon neutrality, the game between supply and demand will bring crude oil into a new cycle. From the supply side, the epidemic and bad weather have hit us shale oil. Considering the uncertainty of global energy transformation and other factors, the U.S. shale oil companies did not increase capital expenditure and were more used to reduce debt and dividends. The increment of short-term shale oil was limited. In this context, the global crude oil pricing power returns to the OPEC + production reduction alliance led by Saudi Arabia and Russia. From the demand side, the gradual recovery of the epidemic has brought strong demand, and the demand in the main downstream application fields of crude oil such as transportation and industry has rebounded rapidly, which is expected to comprehensively surpass the level before the epidemic in a few years. International oil prices have rebounded rapidly and continued to rise since reaching the bottom in May 2020. We expect a new round of crude oil cycle has begun.
The three “attributes” of crude oil dance together. From the perspective of commodity attributes, crude oil still has the conditions for high volatility in the short term. Under the background of relatively rigid demand and clear growth, relatively flexible supply but slightly insufficient supply, short-term negative factors or possible supply increment from Iran and Russia; From the perspective of financial attributes, market expectations and risk appetite will affect crude oil investment, and then affect crude oil prices. As the embodiment of capital game, long short position ratio reflects market sentiment. The continuous contract price of Brent crude oil futures in the futures market is lower than the spot price, and the price difference widens, reflecting the expected high risk of crude oil price in the futures market; From the perspective of political attribute, the country is controlled by controlling crude oil, and the war leads to violent disturbance of short-term crude oil price. International relations, geopolitical wars and other factors disturb the oil production and supply, and the short-term crude oil price and politics affect each other.
The epidemic has repeatedly affected short-term demand recovery and fluctuations. We believe that the demand recovery is the general trend, but the growth rate may fluctuate. It is expected that the demand in the second quarter of 2022 will be the same as that in the first quarter, and the demand will increase by 1.5 million barrels / day in the third quarter. Russia’s supply is limited, the United States led the release of SPR, and OPEC + increased production slightly: the conflict between Russia and Ukraine led to the restriction of Russia’s crude oil export, and there may be a supply gap of 2-3 million barrels of crude oil per day. At the same time, the United States led the IEA to announce the release of oil reserves, OPEC + did not have high enthusiasm for increasing production, and announced a slight increase in the production reduction benchmark. We believe that in 2022, the global oil supply will be under pressure and in short supply. There may be a gap of about 5 Ping An Bank Co.Ltd(000001) .5 million barrels / day in demand, and the crude oil price is expected to continue to rise.
Investment suggestion: hold on to “oil, service and replacement”. Pay attention to offshore oil and gas leaders, and oil and gas development has stepped into CNOOC, which supports the continuous growth of offshore performance; Petrochina Company Limited(601857) , one of the world’s largest oil companies, dominates the production and sales of oil and gas in China; The pioneer of national oil and gas reform and the development of the whole industrial chain of oil exploration, production and sales Zhongman Petroleum And Natural Gas Group Corp.Ltd(603619) ; Leading offshore integrated oil service, backed by the performance of CNOOC China Oilfield Services Limited(601808) ; China’s leading enterprise in coal chemical industry, Ningxia Baofeng Energy Group Co.Ltd(600989) ; C3 / C2 industries are developing in a coordinated manner, and light hydrocarbon integration is taken as the core to build a satellite chemistry of low-carbon chemical new material industry chain.
Focus on investment opportunities for the continuation of the chemical fertilizer industry:
Global food prices continued to rise, driving the boom in chemical fertilizers. Since the second half of 2020, the global Shenzhen Agricultural Products Group Co.Ltd(000061) demand has recovered strongly. The drought in the northern hemisphere in the summer of 2021 led to the reduction of supply and the tightening of major exporting countries, further pushing up the upward trend of Shenzhen Agricultural Products Group Co.Ltd(000061) prices. In 2022, Russia and Ukraine successively banned the export of Shenzhen Agricultural Products Group Co.Ltd(000061) , and the transportation route was blocked. The global Shenzhen Agricultural Products Group Co.Ltd(000061) shortage further deepened. As of May 9, the contract price of CBOT millet / corn / soybean increased by more than 100% year-on-year. The U.S. Department of agriculture again raised the global wheat production / consumption to 779 / 791 million tons in 2022, an increase of 300000 / 2.7 million tons respectively compared with March. The production and demand gap expanded to 12.8 million tons. The global supply and demand continued a tight balance pattern, Drive the prosperity of chemical fertilizer. In the long run, the growth space of global cultivated land area is limited. With the continuous growth of global population, the increase of grain output depends on the continuous investment of agricultural materials. The global unit consumption of fertilizer is gradually increasing, and the demand for chemical fertilizer is rising for a long time.
Potash fertilizer: global resources have been mismatched for a long time, and geographical conflicts have deepened the gap between supply and demand. Since June 2021, Europe and the United States have successively announced sanctions against the Belarus potash industry. In January 2022, the Lithuanian government announced the suspension of the potash transport agreement between the state railway and Belarus, resulting in restrictions on the export and transport of potash fertilizer from Belarus. Under the conflict between Russia and Ukraine, in March 2022, the Russian Ministry of industry said it would suspend the export of chemical fertilizer to some countries and regions. In April 2022, Putin ordered to extend the export restrictions of Russian chemical fertilizer until August 31. Together, they control 40% of the world’s potash export volume. Under the shortage of supply, the international potash price may remain high in the short term. At the end of April, salt lake group completed the supply guarantee task. In May, the ex factory price of 60% powder crystal of the benchmark product was increased by 480 yuan / ton to 3980 yuan / ton, and the arrival price was 4380 yuan / ton; The transaction price in the trader’s market is about 4 Pengxin International Mining Co.Ltd(600490) 0 yuan / ton, and the price still has an upward trend in the near future. Related objects: Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qinghai Salt Lake Industry Co.Ltd(000792) , Zangger mining, Qingdao East Steel Tower Stock Co.Ltd(002545) .
Nitrogen fertilizer: the supply and demand pattern is continuously optimized, and the high cost supports the price. In terms of supply, 1.4 million tons are expected to be put into operation in 2022, with a capacity growth rate of 1.8%. Before 2024, the capacity is planned to be 6.67 million tons, CAGR = 3%, and most of the new capacity is capacity replacement. Under the national energy control and dual carbon policy, the elimination of small-scale enterprises is accelerated, and the industry supply is expected to remain stable. In terms of demand, 70% of the demand in the downstream of urea is agricultural demand. It is expected that the sown area of grain will further increase in 2022, which is expected to stabilize between 1.76-1.78 billion mu, further driving the demand growth of urea by about 2%; In the part of industrial demand, the growth rate of downstream melamine production capacity remains above 10% every year. At present, the real estate control is relaxed and the expectation is strong. The real estate completion cycle is expected to continue, or it will continue to drive the demand for wood-based panels. This six foreign policies continue to contribute to the increment of vehicle urea. In terms of cost, 70% of the world’s urea raw material is natural gas, and the cost of natural gas accounts for more than 70%. Under the influence of the Russia Ukraine incident, the international gas price continues to rise. Due to the uncertain current situation and the low natural gas inventory in Europe, the natural gas price may continue to rise in the future. At present, the global urea cost curve has been reshaped. The cost of India and Europe has been higher than that of China’s low-cost coal production capacity. Among them, the cost of Western Europe and Lithuania is higher than that of China’s anthracite route. The competitiveness of China’s coal and gas urea enterprises is prominent. Related objects: Hubei Yihua Chemical Industry Co.Ltd(000422) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Sichuan Lutianhua Company Limited(000912) , Yangmei Chemical Co.Ltd(600691) , North Huajin Chemical Industries Co.Ltd(000059) , Yunnan Yuntianhua Co.Ltd(600096) , Sichuan Meifeng Chemical Industry Co.Ltd(000731) .
Phosphate fertilizer: the new capacity of the industry is limited, and the export is expected to bring elasticity. On the supply side, according to IFA, the world has passed the peak period of phosphate fertilizer production, and the global phosphate fertilizer production capacity is expected to increase by only 3.6 million tons in the next five years. According to Baichuan, as of March 2022, the effective capacity of Monoammonium and diammonium in China was 18.93 million tons / year and 22.05 million tons / year respectively, down 28.1% and 15.2% respectively compared with 2017. According to the development goal of the phosphate fertilizer industry in the 14th five year plan, by 2025, the annual phosphate fertilizer production capacity will not exceed 20 million tons, and the new production capacity of Monoammonium and diammonium industries will be about 300000 tons in the next five years, with the overall tightening of the supply side. At the export end, China’s production capacity of Monoammonium and diammonium accounts for 63% and 30%, both ranking first in the world. However, in October 2021, the General Administration of Customs announced that it would implement export commodity inspection on phosphate fertilizer, and the export volume fell sharply. At present, the price difference of ammonium phosphate at home and abroad exceeds 3000 yuan / ton. We believe that with the gradual liberalization of China’s phosphate fertilizer export, leading enterprises are expected to give priority to obtaining corresponding export quotas and fully enjoy the dividend of international prices with their integration advantages and capacity scale. Related objects: Yunnan Yuntianhua Co.Ltd(600096) , Hubei Yihua Chemical Industry Co.Ltd(000422) , Hubei Xingfa Chemicals Group Co.Ltd(600141) , Xinyangfeng Agricultural Technology Co.Ltd(000902) , Guizhou Chanhen Chemical Corporation(002895) , Chengdu Wintrue Holding Co.Ltd(002539) , Sichuan Development Lomon Co.Ltd(002312) , Kunming Chuan Jin Nuo Chemical Co.Ltd(300505) . Crossing cycle of chemical Faucet:
Leading enterprises expand their advantages, while the valuation is obviously low, or realize through the cycle. It is suggested to focus on leading enterprises with excellent quality and core competitiveness, such as Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Jiangsu Yangnong Chemical Co.Ltd(600486) , Zhejiang Nhu Company Ltd(002001) , Rongsheng Petro Chemical Co.Ltd(002493) , Tongkun Group Co.Ltd(601233) , Hengli Petrochemical Co.Ltd(600346) . With the improvement of health awareness, sugar substitutes have become the general trend of the times. It is suggested to pay attention to the addition of food in the business cycle
