Steel industry: demand continues to rise, inventory is falling rapidly
Maintain the industry “overweight” rating. Demand for steel returns, steel prices steadily rise, and inventory depletion is accelerated.
The bottom of the steel sector has been found, waiting for the return of value, it is recommended to increase the holding of the industry leader. It focuses on recommending low-cost, strong-management general steel leaders Baosteel, Valin Steel, Shougang, Xingang, Fangda Special Steel, etc.
Benefiting from the upgrading of manufacturing industry and import substitution, we recommend special steel leader Yongjin, CITIC Special Steel, Fushun Special Steel, Jiuli Special Material, Guangda Special Material, and continue to recommend Yongxing materials that transform to lithium battery standards. Considering that the proportion of electric furnace steel continues to increase, Fangda Carbon, the leader of graphite electrodes, is recommended. To benefit from the development of flow battery energy storage, we recommend vanadium resource leader Panzhihua Iron and Steel Vanadium and Titanium.
The demand recovery trend remains unchanged, and the inventory is accelerated. As of December 8th this week, the average daily transaction volume of building materials was 178,900 tons. As demand picks up, downstream transactions have gradually increased. This week, the output of major varieties of steel was 9.0625 million tons, an increase of 153,400 tons from last week, and the trend of low and fluctuating steel supply remained unchanged.
This week’s five major steel mill inventories fell by 444,800 tons, and social inventories fell by 353,300 tons. Among them, rebar steel mill inventories and social inventories fell by 238,000 and 252,000 tons, hot coil steel mill inventories and social inventories fell by 1.54 and 2.89 respectively. Million tons. The apparent consumption of five major types of steel this week was 9,860,600 tons, an increase of 49,400 tons from last week, and the demand for steel continued to rise. In terms of categories, the demand for steel for construction has fallen, but the demand for steel for manufacturing has risen sharply. We believe that the demand for steel is more resilient, and steel prices will continue to pick up.
The suppression of the supply of the Winter Olympics has gradually manifested, and the low supply of the steel industry has remained unchanged. Judging from the recently announced policy for staggered production in the heating season of 2021-22 in Beijing-Tianjin-Hebei and surrounding areas, from January 1st to March 15th, 22, the ratio of staggered production by steel companies in the relevant regions was not lower than the same period of the previous year. 30% of output. According to our calculations based on a 30% ratio, the output of crude steel in the five provinces and cities affected in the first quarter of 22 may be reduced by 27.95 million tons, and the peak shift in this time has increased by 8 cities compared with that in 20 years. big. Judging from the current policies for the Winter Olympics, the supply side may be suppressed or stricter than market expectations. The current market’s pessimistic expectations for demand are gradually weakening. In the context of stabilizing the economy, our previous judgment that real estate will not have a hard landing is gradually fulfilled. The demand for steel will not drop sharply, and the cost of steel will still be weak, and the profitability of the industry will be Well maintained.
Manufacturing demand is on the high side. We have observed that the impact of the lack of cores on the automotive industry has gradually disappeared, the demand for steel in the automotive industry has gradually returned, and the demand for hot coils has steadily increased. In addition, the impact of dual energy consumption control and power curtailment policies on the manufacturing industry is gradually fading out, and we expect manufacturing demand to gradually recover. In terms of construction steel, the apparent consumption of rebar currently fluctuates at a low level. In the winter, demand in various regions is gradually weakening. Looking at 2022, the special debt funds may be issued in advance, and the policy’s intention to support infrastructure is obvious. In 2022, infrastructure will stimulate the upward demand for steel, and the demand for construction steel may gradually recover in the later period.