Market review:
As of the closing on January 21, the steel sector fell 0.24% this week, the Shanghai and Shenzhen 300 index rose 1.11%, and the steel sector lagged behind the Shanghai and Shenzhen 300 index by 1.35%. In terms of sector ranking, the weekly growth rate of the steel industry ranks 11th among Shenwan 31 sectors, with an increase of - 2.96% year to date, and ranks 14th among Shenwan 31 sectors.
Talk every Monday:
The annual data came out, and the daily output of crude steel increased by 20.3% month on month in December: according to the data of the Bureau of statistics, 31.9785 million tons of crude steel were reduced year-on-year in 2021, successfully completing the task of reducing the annual output of crude steel by 20 million tons proposed by the Ministry of industry and information technology at the end of 2020; In December, the daily output of crude steel was 2.78 million tons, an increase of 20.3% month on month. Under the combined influence of the slowdown in the pressure of horizontal control policy and the high profit per ton of steel in mid December, the production expansion of steel mills continues, but the rhythm may be disturbed by the production restriction policy in the heating season. Taking Tangshan as an example, our iron and steel network estimates that the daily average capacity utilization rate of Tangshan high furnace will greatly drop to about 55% from February to March (a decrease of 13% month on month); Affected by the production restriction in the northern region and the increase of overhaul during the Spring Festival, the recovery rate of crude steel production in the country may slow down for a short time, but the expectation of resumption of production of steel mills after the festival is still strong. Combined with the recent statement of the national development and Reform Commission and the Bureau of statistics on moderately advancing the infrastructure investment policy, the steel market after the festival is expected to usher in a pattern of simultaneous recovery of supply and demand;
Before the festival, the supply and demand were both weak, the profit per ton of steel continued to decline, and continued to pay attention to the growth opportunities of enterprises in the sub track of stainless steel, special steel, seamless steel pipe, cast pipe and welded pipe: the spot market before the festival entered the pattern of double weakness of supply and demand, and the trade trading was light. As of January 20, the weekly output of five major varieties of steel was - 2.63% (- 3.39pct) month on month, and the social inventory rebounded significantly, Apparent consumption was - 7.04% (- 7.86pct) month on month, up from - 12.48% (- 6.01pct) year on year, and the daily average trading volume of building materials fell to 56400 tons; This week, the logic of steel plant resumption of production continued to be deduced, and the gross profit per ton of steel continued to decline. As of January 21, the spot gross profit per ton of steel in thread and hot coil spot fell to below 700 yuan / ton as scheduled; Under the condition that the restriction orientation for crude steel output is not clear, it is expected that the long-term resumption of production of steel mills 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 estimated repair opportunities of industry leaders, superimposed with the expectation of rising infrastructure investment, Pay close attention to the investment opportunities brought by the accelerated pipeline transformation to the cast pipe and welded pipe market;
Market impact: the resumption of production of steel mills is still continuing, and attention is paid to the suppression of the weak expectation of administrative production restriction on the profit per ton of steel and the release of infrastructure demand. The stainless steel processing enterprises with anti cycle and growth attribute have significant investment value, and the special steel, seamless pipe, welded pipe and cast pipe enterprises with low valuation have good investment opportunities;
Investment strategy: focus on recommending stainless steel processing enterprises Zhejiang Yongjin Metal Technology Co.Ltd(603995) and pipe processing enterprises Zhejiang Jiuli Hi-Tech Metals Co.Ltd(002318) with growth potential benefiting from the recovery of manufacturing industry, and recommend special steel leaders Citic Pacific Special Steel Group Co.Ltd(000708) with significant valuation advantages;
Risk tip: the policy implementation is less than expected, the supply contraction is limited, and the demand is less than expected.
