Main events: the Bureau of statistics released the operation data of the iron and steel industry in December, combined with the import and export data of the customs, as follows:
In December 2021, China's crude steel output was 86.19 million tons, a year-on-year decrease of 6.8%, and the average daily output was 2.78 million tons, an increase of 20.3% month on month; From January to December, China's crude steel output was 1032.79 million tons, a year-on-year decrease of 3.0%;
In December, China's pig iron output was 72.1 million tons, a year-on-year decrease of 5.4%; From January to December, China's pig iron output was 868.57 million tons, a year-on-year decrease of 4.3%;
In December, China's steel output was 113.55 million tons, a year-on-year decrease of 5.2%; From January to December, China's steel output was 1336.67 million tons, a year-on-year increase of 0.6%;
In December, China exported 5.03 million tons of steel, a year-on-year increase of 3.6%, and a month on month increase of 666000 tons, an increase of 15.3%; From January to December, China exported 66.9 million tons of steel, a year-on-year increase of 24.6%;
In December, China imported 1 million tons of steel, a year-on-year decrease of 26.9%, a month on month decrease of 420000 tons, a decrease of 29.5%; From January to December, China imported 14.27 million tons of steel, a year-on-year decrease of 29.5%;
In December, the import volume of iron ore was 82.17 million tons, a year-on-year decrease of 7.7% and a daily average month on month decrease of 20.6%. From January to December, the import volume of iron ore was 1124.32 million tons, a year-on-year decrease of 3.9%.
There is little improvement in the downstream, and the demand recovery is more due to the inventory cycle: the year-on-year growth rate of steel demand in December calculated in combination with the output and inventory data is - 5.2%, which is significantly narrowed from - 25% in the previous month, the year-on-year growth of net steel export is 16%, the growth rate of domestic demand is - 6%, and the growth rate of last month is - 26%. Downstream real estate did not improve, with sales, new construction and investment of - 15.6, - 31% and - 13% year-on-year in a single month Infrastructure construction decreased by - 0.6% in a single month, narrower than that in the previous month. The growth rate of industrial output picked up, the growth rate of automobile, special equipment and metal products in high consumption steel industry picked up, and the growth rate of general equipment and electrical machinery continued to slow down. On the whole, the real estate is still in the doldrums, the manufacturing industry and infrastructure have rebounded, and the overall steel demand is limited. However, we see that the synchronous decline in steel demand narrowed significantly in December. We tend to be caused by the short cycle of industrial chain inventory, that is, the price decline in November led to the pessimistic destocking of the industrial chain. After the emotional overshoot, the inventory cycle bottomed out and rebounded, promoting the staged rebound of steel orders and the rebound of steel and iron ore prices.
Steel exports rebounded: from October to November, the sharp contraction of steel demand led to a sharp decline in steel prices. China's steel surplus increased and overflowed, driving the rebound of export volume. This may only be the result of excess, rather than a good performance of external demand. According to overseas data, the upswing of demand in the United States after the epidemic has come to an end. Its steel capacity utilization rate has fallen to around 82% after reaching a high of 85% in October. Pay attention to the risk of peak demand boom.
Decline in iron ore imports: iron ore imports contracted significantly, which was related to the sharp decline in iron ore prices in the early stage and falling below the cost of some overseas non mainstream mines. The ore price rebounded significantly from November to January, which is related to the recovery of demand, inventory cycle and winter storage. The sustainability of these factors is limited, and the ore price is expected to weaken again.
Black prices are expected to weaken: the rebound in steel prices and iron ore prices since mid November 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 to strengthen; 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 to support processing fees. 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. The failure probability of this round of oversold rebound is high, 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.
Risk tip: the risk of shrinking the real estate industry chain; Uncertainty of supply side production restriction; The public data used in the report may have the risk of information lag or untimely update.
