This week’s view
Steel industry: short-term fluctuations do not affect the industry fundamentals under the “stable economy”
As of January 21, the five major varieties of thread, hot coil, medium and heavy sector, cold rolling and wire rod reported 4811 yuan / ton, 4890 yuan / ton, 4999 yuan / ton, 5398 yuan / ton and 5145 yuan / ton respectively this week. The circumferential ratio changed by 0.5%, 0.4%, 0.5%, – 0.3% and 0.4% respectively. In terms of social inventory, this week’s social inventory was 9.7176 million tons, up 547100 tons on a weekly basis.
Gross profit per ton of steel narrowed. The gross profit per ton of steel for thread, hot coil, medium and heavy sector, cold rolling and wire rod was 147 yuan, 161 yuan, 67 yuan, 180 yuan and 440 yuan respectively, down 93 yuan, 43 yuan, 58 yuan, 71 yuan and 57 yuan from last week.
In the short term, the market turnover has dropped significantly near the Spring Festival holiday. On the supply side, Hebei, Shandong and Henan successively implemented the production restriction plan of the Winter Olympic Games, and the supply side is expected to remain low in the first quarter. On the demand side, with the recent intensive introduction of various favorable infrastructure and real estate policies and the resumption of industrial enterprises after the Spring Festival, it is expected that the demand will improve significantly after the festival. Therefore, we believe that the supply and demand pattern of steel after the festival is expected to be reshaped.
Continue to be optimistic about pipeline investment opportunities this year. We believe that the policy interruption signal continues to be released, with the word “stability” of the economy in 2022 superimposed, and local government meetings have been held to discuss this year’s economic work. At present, the pipeline industry is gradually transitioning from expectation to policy implementation. Therefore, we believe that under the background of “stabilizing the economy”, the pipeline industry is expected to accelerate the release of demand again with certainty. It is strongly recommended to pay attention to the relevant targets of the pipeline industry under the stable economy.
In addition, our first steel subdivision high-end variety, electrical steel, is the core magnetic material driving modern industry. In particular, high-grade non oriented electrical steel for new energy vehicles has extremely high technical barriers. Baosteel and Shougang master the core technology. Since new energy vehicles can only use high-grade non oriented silicon steel instead of all varieties, the consumption of new energy vehicles will account for 10% of the output of high grades in 2020. In addition, the motor energy efficiency upgrading plan (2021-2023) is released. The improvement of motor energy efficiency standards will bring a lot of demand for high-grade non oriented silicon steel. It is suggested to pay attention to the main targets of electrical steel: Beijing Shougang Co.Ltd(000959) , Baoshan Iron & Steel Co.Ltd(600019) , Shanxi Taigang Stainless Steel Co.Ltd(000825) , Xinyu Iron & Steel Co.Ltd(600782) , Maanshan Iron & Steel Company Limited(600808) .
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Industrial sector companies: Beijing Shougang Co.Ltd(000959) , Hunan Valin Steel Co.Ltd(000932) , Nanjing Iron & Steel Co.Ltd(600282) , Shanxi Taigang Stainless Steel Co.Ltd(000825) , Maanshan Iron & Steel Company Limited(600808) , Baoshan Iron & Steel Co.Ltd(600019) , Xinyu Iron & Steel Co.Ltd(600782) , Angang Steel Company Limited(000898) .
Key special steel companies: Zhejiang Yongjin Metal Technology Co.Ltd(603995) , Citic Pacific Special Steel Group Co.Ltd(000708) , Fushun Special Steel Co.Ltd(600399) , Jiangsu Toland Alloy Co.Ltd(300855) , Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) . Building materials companies: Fangda Special Steel Technology Co.Ltd(600507) , Sansteel Minguang Co.Ltd.Fujian(002110) , Sgis Songshan Co.Ltd(000717) .
Municipal pipeline material company: Xinxing Ductile Iron Pipes Co.Ltd(000778) , Zhejiang Kingland Pipeline And Technologies Co.Ltd(002443) , Tianjin You Fa Steel Pipe Group Stock Co.Ltd(601686) , Ningxia Qinglong Pipes Industry Group Co.Ltd(002457) .
Nonferrous Industry: continue to be optimistic about the rare earth and lithium sector under the tight balance of supply and demand and the lithium sector driven by the demand for magnetic materials under the new energy system. This week, spodumene quoted us $2690 / ton, up 0%; Lithium hydroxide quoted 277500 yuan / ton, up 5.71%; The quotation of battery grade lithium carbonate was 355000 yuan / ton, up 10.94%. In rare earth sector, praseodymium and neodymium oxide, dysprosium oxide and terbium oxide were quoted at 930000 yuan / ton, 2990000 yuan / ton and 13 million yuan / ton this week, up 2.76%, 0% and 0.78% respectively. The spot supply of raw materials in the upstream of new energy continues to be tight, and the state of continuous low inventory in the industrial chain will remain. Driven by the replenishment of inventory by downstream enterprises, we expect the price center of lithium and rare earth to continue to rise;
In the magnetic materials sector, the introduction of energy-saving motor policy under the guidance of double carbon and the pull of magnetic materials under the rapid development of new energy, wind power and photovoltaic energy storage in the future. We are optimistic about the pull of rare earth permanent magnet materials under the trend of high-efficiency energy-saving and miniaturization of motors, and the demand of new high-efficiency soft magnetic materials silicon steel and metal soft magnetic powder cores in the new energy era;
In terms of industrial metals, SHFE copper prices fell 0.24% this week to close at 71290 yuan / ton; SHFE aluminum price rose 1.28% to close at 21430 yuan / ton. Under the impact of Omicron this week, the number of initial jobless claims in the United States rose to 286000, existing home sales fell by 4.6%, and the tightening of Fed policy may be postponed; China’s steady growth policy has been gradually implemented, and all interest rates have been lowered, which is conducive to market risk appetite; As the Spring Festival approaches, the downstream terminals will have holidays one after another, and the off-season effect will gradually appear. Copper and aluminum may usher in a short-term turning point of accumulation. Recently, the profit of electrolytic aluminum has been repaired, the enthusiasm for resumption of production is high, and the operating capacity has increased slightly. The first quarter is expected to be the main release time window of resumption of production capacity in 2022.
European and Russian geopolitics have exacerbated the problem of energy shortage in Europe, and overseas production reduction is still possible to expand. According to SMM statistics, the current electrolytic aluminum production capacity in Western Europe is about 5 million tons, accounting for 6% of the global total production capacity. At present, the production capacity of major aluminum smelters in Europe has been reduced by about 842000 tons due to energy problems, accounting for 1.1% of the global electrolytic aluminum production capacity. Overseas aluminum inventory has continued to decline since March 2021, and LME inventory has decreased from 1.96 million tons to the current 740000 tons, which is at a historical low in recent five years. If the problem of high electricity price continues to be not alleviated, the global raw aluminum supply will face the risk of further contraction.
At present, the average profit of simulated electrolytic aluminum industry reaches 3950 yuan / ton, and the profit of electrolytic aluminum link continues to improve. After the off-season of the Spring Festival, policies related to steady growth are gradually implemented, which is expected to bring significant improvement in demand after the Spring Festival. At present, the valuations of basic metal related targets have reflected extremely pessimistic expectations. It is expected to usher in fundamental repair in the future. At the same time, superimposed valuation repair, the metal raw material industry will usher in a new round of market.
Focus on the subject
\u3000\u3000 China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) 、 Ganfeng Lithium Co.Ltd(002460) 、 Tianqi Lithium Corporation(002466) 、 Qinghai Salt Lake Industry Co.Ltd(000792) 、 Shenghe Resources Holding Co.Ltd(600392) 、 Rising Nonferrous Metals Share Co.Ltd(600259) 、 China Minmetals Rare Earth Co.Ltd(000831) 、 Poco Holding Co.Ltd(300811) 、 Hengdian Group Dmegc Magnetics Co.Ltd(002056) 、 Ningbo Jintian Copper (Group) Co.Ltd(601609) 、 Zhejiang Hailiang Co.Ltd(002203) 、 Guangdonghectechnologyholdingco.Ltd(600673) 、 Kbc Corporation Ltd(688598) 、 Zijin Mining Group Company Limited(601899) 、 Western Mining Co.Ltd(601168) 、 Aluminum Corporation Of China Limited(601600) 、 Yunnan Aluminium Co.Ltd(000807) 、 Henan Shenhuo Coal&Power Co.Ltd(000933) 。
Risk tips: the risk of sharp fluctuation in the price of raw materials in the upstream, the risk of lower than expected demand in the downstream, and the risk of continuous spread of overseas epidemic.
