Tianfeng Securities Steel Industry Research Weekly: winter production restrictions superimposed infrastructure recovery is expected to highlight investment opportunities in the iron and steel sector

Core point of view

On January 7, an article from the Policy Research Office of the National Development and Reform Commission pointed out that it is necessary to put stable growth in a more prominent position and maintain a stable and healthy economic environment. We will coordinate epidemic prevention and control and economic and social development, continue to implement proactive fiscal policies and prudent monetary policies, and organically combine cross-cyclical and counter-cyclical macro-control policies. He Lifeng, minister in charge of the National Development and Reform Commission, pointed out in an article that we should properly implement the outline of the strategic plan for expanding domestic demand and the implementation plan of the 14th five-year Plan, speed up the issuance and use of local government special bonds, and appropriately carry out infrastructure investment in advance.

From the current macroeconomic policy, moderately ahead of infrastructure investment or stable growth policy is one of the main means to effectively hedge the risk of real estate decline. From the market reaction last week, the urban pipe network plate began to reflect this part of the expectation, the new cast pipe, Jinzhou pipeline and so on led the increase.

From the point of view of the profits of steel enterprises, the resumption of production and replenishment of raw materials in winter before the Spring Festival has promoted the rebound of iron ore, while the share of large-scale blast furnace production of extruded electric furnace, the profit per ton of steel has fallen back from the high level, and part of the production capacity of electric furnace steel has no profit. The profit of short process steel has dropped sharply, the profit of rebar is the worst, the gross margin of cold rolling is 52 yuan / ton, the profit of cold rolling is the highest, but the profit of long process is still high, the profit of rebar is the worst, the gross profit of steel per ton is 785 yuan / ton, the profit of cold rolling is the highest, the gross profit of steel per ton is 1245 yuan / ton.

With the end of the winter reserve and the holding of the Winter Olympic Games, steel production restrictions are expected to be stricter, demand side with the steady growth of real estate, infrastructure and other policy effects gradually appear, steel price center of gravity or gradually upward, superimposed production restrictions on the weakening of demand for raw materials, steel profits are expected to improve.

It is suggested to pay attention to: (1) Pu Steel plate: Valin Iron and Steel, New Steel shares, Shougang shares, Maanshan Iron and Steel shares, three Steel Minguang, etc.; (2) Special Steel Plate: Jiuli Special Materials, the vast number of special materials, CITIC Special Steel, Yongjin shares.

Risk hints: macroeconomic repair is not as expected; global inflation is higher than expected; ore production is not up to expectations; novel coronavirus vaccine development and vaccination progress is lower than expected.