Investment summary:
Market review:
As of the closing on January 14, the steel sector fell 4.77% this week, the CSI 300 index fell 1.98%, and the rise of the steel sector lagged behind the CSI 300 index by 2.79%. From the sector ranking, the weekly growth rate of the steel industry ranks 28th among Shenwan 31 sectors, with an increase of - 2.72% year to date, ranking 16th among Shenwan 31 sectors.
Talk every Monday:
Crude steel output continued to increase month on month and demand remained sluggish: according to the data of China Iron and Steel Association, in late December 2021, according to key statistics, iron and steel enterprises produced a total of 23.0145 million tons of crude steel, with a daily output of 2.0922 million tons of crude steel, an increase of 10.67% month on month. Under the comprehensive influence of the slowdown of the pressure of the early horizontal control policy and the high profit per ton of steel, the steel plant continued to expand production, As of January 14, the weekly output of five major varieties of steel was + 0.76% (- 1.85pct) month on month. Our steel network estimated that the crude steel output in the first ten days of January increased by 4.14% month on month; It is expected that in January, the north steel plant will continue to be affected by the policy and the momentum of resumption of production will slow down, but the national crude steel output will continue to rise; In the near future, the long-term pessimistic expectation of real estate continues to be revised, and the expectation related to infrastructure has also recovered, but no significant demand has yet been formed. On Friday, the apparent consumption of large varieties of steel was + 0.82% (+ 0.41pct) month on month, with a year-on-year increase of - 6.47% (+ 1.29pct). The statement made at the national regular meeting this week on accelerating the promotion of major projects determined in the special plan and expanding effective investment further improved the expectation of infrastructure recovery, After the festival, further observe the pulling effect of the investment side on demand;
The profit per ton of steel went down as scheduled, and continued to pay attention to the growth opportunities of enterprises in the segments of stainless steel, special steel, seamless steel pipe and cast pipe: as of January 14, the port iron ore inventory rose to about 157 million tons, the rainfall in Brazil disturbed the iron ore supply, and the ore price strengthened significantly. At the same time, the fourth round of increase of steel coke fell to the ground, with a cumulative increase of about 700 yuan / ton. As of January 14 The spot gross profit per ton of hot coil spot steel fell to around 700 yuan / ton as scheduled, and the logic of resumption of production continued to be deduced; Under the condition that the restriction orientation for crude steel output is not clear, it is expected that the resumption of production of the steel plant will continue, and the profit per ton of steel may be suppressed for a long time. Focus on the growth opportunities of stainless steel, special steel, seamless steel pipe and cast pipe segments, as well as the valuation and repair opportunities of industry leaders;
Market impact: the continuous high profitability of steel or the resumption of production of steel mills, pay attention to the suppression of the weak expectation of administrative production restriction on the profit per ton of steel and the investment performance after the lunar new year. The stainless steel processing enterprises with anti cycle and growth attribute have significant investment value, and the special steel, seamless pipe and cast pipe enterprises with low valuation have good investment opportunities;
Investment strategy: focus on recommending Zhejiang Yongjin Metal Technology Co.Ltd(603995) stainless steel processing enterprises and Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) pipe processing enterprises with growth potential benefiting from the recovery of manufacturing industry, and recommend Citic Pacific Special Steel Group Co.Ltd(000708) special steel leaders with significant valuation advantages;
Risk tip: policy implementation is less than expected, supply contraction is limited, and demand is less than expected.
