Investment strategy: the rebound of steel and iron ore prices since December has been driven by multiple factors. First, the phased improvement of actual demand after the loosening of Q4 real estate financing policy; second, the steady growth policy drives the market expectation stronger; third, the short-term recovery of industrial chain inventory after price overshoot; Fourth, the winter storage of raw materials; and fifth, the expected production restriction of the Winter Olympic Games supports the processing fee. Iron ore prices have risen from a minimum of $87 to a maximum of $131, an increase of 50%. We believe that the current black price has implied a high demand expectation. At the same time, many factors driving the price rebound cannot be sustained. This round of oversold rebound has a high failure probability, and the medium-term price may weaken again. From a longer time perspective, the real estate cycle is still in a spiral downward process, and the steel supply policy will also face great uncertainty after the first quarter. It is suggested to look for opportunities in the growing new material industry and pay attention to Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Zhangjiagang Guangda Special Material Co.Ltd(688186) , Fushun Special Steel Co.Ltd(600399) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) , Yongxing Special Materials Technology Co.Ltd(002756) , etc.
One week market review: this week, the Shanghai Composite Index fell 1.63%, the Shanghai and Shenzhen 300 index fell 1.98%, and the Shenwan steel sector fell 4.77%. This week, the main contract of rebar closed at 4695 yuan / ton, with a week-on-week increase of 75 yuan / ton, a range of 1.62%; the main contract of hot rolled coil closed at 4846 yuan / ton, with a week-on-week increase of 26 yuan / ton, a range of 0.54%; The main iron ore contract closed at 736.0 yuan / ton, with a week-on-week increase of 30.5 yuan / ton, an increase of 4.32%.
Downward trading volume: the weekly average trading volume of national construction steel this week was 119200 tons, with a month on month decrease of 28400 tons. The social inventory of the five varieties was 9.155 million tons, an increase of 283000 tons month on month. The trading volume of building materials decreased seasonally this week. Next, as the Spring Festival approaches, the demand for building materials will gradually weaken and be closed. In terms of inventory, the steel mill inventory is transferred to social inventory, the accumulation of social inventory is accelerated, and the subsequent inventory will continue to rise passively.
The electric furnace operating rate and capacity utilization rate decreased significantly: the blast furnace operating rates of 247 Mysteel steel enterprises and Tangshan Steel Plant were 75.77% and 54.76% respectively this week, with a month on week increase of + 1.57pct and + 3.97pct; This week, the blast furnace capacity utilization rates of mysteel247 steel enterprises and Tangshan Steel Plant were 79.89% and 70.62% respectively, with a month on week increase of + 2.00pct and + 9.69pct. The operating rate of 71 home appliance arc furnaces this week was 36.69%, with a month on week ratio of -7.78pct; The capacity utilization rate was 38.95%, down from -5.80pct last week. This week, the environmental protection production restriction in Tangshan was lifted, and the production level of blast furnace increased significantly. In terms of electric furnaces, with the continuous shutdown and holidays of electric furnace plants, the operating rate and capacity utilization rate of electric furnaces have decreased significantly. Overall steel production rose slightly.
Steel prices rose slightly: myspic comprehensive steel price index increased by 0.51% on a weekly basis, including 0.53% for long materials and 0.48% for sectors. Shanghai rebar 4750 yuan / ton, a decrease of 20 yuan / ton on a weekly basis, an increase of 0.42%. Shanghai hot rolled coil 4940 yuan / ton, an increase of 10 yuan / ton on a weekly basis, an increase of 0.20%. With the Spring Festival approaching, the transaction will remain depressed. Supported by high costs and favorable macro news, steel prices rose slightly, and the market entered the stage of price without market.
The ore price fluctuated in a narrow range: this week platts62%127.95 US dollars / ton, the weekly ring ratio increased by 0.65 US dollars / ton, and the price difference between high and low products expanded. Last week, the shipment volume of Australia and Brazil was 1987.3 million tons, a month on month decrease of 5.679 million tons, and the arrival volume was 12.131 million tons, a month on month decrease of 724000 tons. The latest steel mill imported ore inventory days were 30 days, unchanged from the last time. Tianjin Zhunyi metallurgical coke was 3210 yuan / ton, an increase of 200 yuan / ton compared with last week. Scrap steel is 3210 yuan / ton, a decrease of 20 yuan / ton compared with last week. Iron ore prices fluctuated narrowly this week. On the supply side, heavy rains in Brazil led to the shutdown of many mining areas and the reduction of imported iron ore shipments. In terms of demand, the output of downstream steel enterprises has increased recently, and the output of molten iron continues to grow, but the demand for replenishment of steel mills during the Spring Festival will weaken.
Acceleration of profit decline: the profit decline of mainstream steel grades accelerated this week. According to our simulated steel data, the coke price at the raw material end operated strongly during the week, other raw materials also increased to varying degrees, and the billet cost further increased. The average price of end girth of finished wood changes little. The profit level per ton of steel fell significantly under the cost squeeze, in which the gross profit of hot rolled coil (3mm) decreased by 167 yuan / ton, and the gross profit margin decreased to 9.08%; The gross profit of cold rolled sheet (1.0mm) is reduced by 196 yuan / ton, and the gross profit rate is reduced to 4.83%; The gross profit of deformed steel bar (20mm) is reduced by 204 yuan / ton, and the gross profit margin is reduced to 9.49%; The gross profit of medium and heavy sector (20mm) is reduced by 289 yuan / ton, and the gross profit rate is reduced to 5.12%.
Risk tip: the sharp decline of macro economy leads to pressure on demand; The pressure at the supply end continues to increase.
