Steel industry: inventory basically sees the year-on-year high

Inventories continued to rise this week and downstream demand continued to postpone. At present, the downstream demand is slower than that of previous years, resulting in the continued accumulation of steel social inventories. This week, it rose to 1.66 million tons, but the accumulation rate slowed down. From the historical and statistical point of view, this week's inventory basically saw the full year high, spring. Rework will only be late and will not be absent. In the pessimistic expectation of full release, the steel price declines and the turnover is good, and the export and electric furnace steel costs are double-supported. The steel price has a rebound base, but the high inventory will still inhibit the elasticity of spring demand. Steel prices should not be overly optimistic. It is necessary to continue to observe the strength of rework and inventory changes, and steel price fluctuations will continue to increase.

Demands are running smoothly, supply flexibility is limited, and steel prices fluctuate at high levels throughout the year. In 2018, steel demand remained stable overall, real estate infrastructure investment growth rate declined steadily, manufacturing and exports gradually recovered; supply-side electric furnace steel superimposed blast furnace resumption of production was incremental, de-capacity and heating season limit production was reduced, measuring all The annual supply increased by 10 million tons, the capacity utilization rate remained high, and the steel price fluctuated at a high level throughout the year, maintaining the rebar center at 3800-4000 yuan/ton.

The core assets basically fell out of value, recommending Baosteel and Fangda Special Steel. In the case of increased steel price volatility, profitability stability, cost advantage and dividend advantage will become the core factors of pricing. On January 25, 2018, we raised Baosteel's 2018 performance forecast to 24 billion. Baosteel will become a global expansion of the global expansion of research and development, driving a high proportion of dividends. The company has no large-scale investment in the future, and its asset-liability ratio and financial expenses have decreased, and dividends have increased. With the release of WISCO and Zhanjiang's performance, cost reductions continue to advance, and the company's performance in the next few years is expected to exceed expectations. In addition, we continue to recommend Fangda Special Steel with high dividend yield, high return on net assets, stable operation, sustained profitability and low cost.

This week, the prices of major varieties of steel fell, and raw material prices fell. This week, steel industry stocks rose by 1.133 million tons, and steel mills' stocks rose by 5.02 million tons. Among them, the social stock of rebar increased by 741,300 tons, the inventory of steel mills increased by 193,700 tons; the stock of hot coils increased by 132,300 tons, and the inventory of steel mills decreased by 55,800 tons. Shanghai rebar spot price 3860 yuan / ton, down 240 yuan / ton; hot rolled coil spot price 4020 yuan / ton, down 200 yuan / ton from last week; raw materials, iron ore spot price dropped 39 yuan / ton to 513 yuan / ton; futures fell 55.5 yuan / ton to 483.5 yuan / ton. The spot price of coke was flat last week, and the futures price fell by 207 yuan / ton to 2035 yuan / ton. It is estimated that the profit of rebar production will fall by 180.8 yuan/ton to 926.7 yuan/ton, and the profit of hot coil will fall by 140.8 yuan/ton to 686.7 yuan/ton.

This week, the national blast furnace operating rate declined slightly, and raw material stocks changed. The operating rate of Tangshan blast furnace increased slightly to 51.83% this week, and the operating rate of blast furnaces nationwide declined slightly. In terms of raw materials, the inventory of iron ore ports decreased from up to down; the inventory of coke coking plants increased slightly, the inventory of ports increased sharply; the inventory of coking coal coking plants continued to decline, and the inventory of major ports increased sharply. Scrap prices fell slightly this week, graphite electrode prices fell, manganese silicon prices remained flat last week, ferro-vanadium prices rose, and refractory prices fell. Stainless steel prices rose slightly this week, nickel prices fell, and international steel prices continued to pick up.