20180208-广发证券_香港_-China_Pulse_Check__Steel_Sector_Winter_stockpiling_boosting_steel_prices__raw_materials_remaining_weak_sector_earnings_to_improve_9页_812kb

报告摘要

China Pulse Check: Steel Sector Summary

Core Content

This document provides an analysis of the Chinese steel sector, focusing on demand, supply, raw materials, and earnings performance in January and February 2018, along with market outlook and company recommendations.

Main Points

Demand Trends

Property Investment: Increased by 7.0% YoY in 12M17, with a slight easing of 0.5pp from 11M17.
Infrastructure Investment: Grew by 14.93% YoY, but decreased by 0.90pp from 11M17.
Seasonal Impact: Construction activities and steel trading are expected to decline in February 2018 due to colder weather and the Chinese New Year (CNY) holiday, leading to weaker steel demand.
Property Sales and New Starts: Both showed positive YoY growth, with property sales up 13.70% and new starts up 7.00%.

Supply Trends

Crude Steel Output: In the second ten-day period of January, the daily average crude steel output was 2,232.2k tonnes, down 0.43% from the previous ten-day period.
Production Restrictions: The heating season production cuts had a noticeable effect, with daily output at 2,222.7k tonnes during the restriction period, down 2.49% from November 2017.
Steel Mill Overhauls: Expected to increase in February, leading to a moderate decline in blast furnace utilization rates.
Inventory Levels: Steel industry chain inventories are significantly lower than the same period in 2017, but steel dealers’ inventory has risen for five consecutive weeks since January 2018, indicating the start of winter stockpiling.

Raw Materials

Coke Inventory: At 110 steel mills, it reached 4.68m tonnes as of 2 Feb 2018, up 1.10% MoM.
Imported Iron Ore Inventory: Average inventory days stood at 35, up by one day from 19 Jan 2018.
Coking Oven Utilization: Reached 79.25%, up 0.09pp MoM since the previous period, indicating strong raw material restocking before CNY.
Port Iron Ore Inventory: At 151.43m tonnes, reflecting a large supply of iron ore.
Price Outlook: Iron ore and coke prices are expected to decline in February due to weak demand and increased production restrictions.

Earnings Performance

Steel Product Earnings: Most steel products saw a decline in January, with rebar, hot-rolled, and cold-rolled steel showing reduced gross profits.
Average Gross Profit: Rebar at Rmb1,097.53/tonne, hot-rolled at Rmb1,151.22/tonne, and cold-rolled at Rmb1,032.55/tonne in January.

February Outlook

Steel Prices: Expected to rise modestly due to seasonal winter stockpiling.
Iron Ore Prices: Likely to fluctuate downwards.
Sector Earnings: Projected to improve as steel prices stabilize and demand gradually recovers.

Key Company Recommendations for February 2018

Baoshan Iron & Steel (600019 CH)
Fangda Special Steel Technology (600507 CH)
Nanjing Iron & Steel (600282 CH)
Angang Steel (000898 CH)
Maanshan Iron & Steel (600808 CH)

Risks

A significant economic downturn
Steel exports not meeting expectations
Weaker enforcement of production cuts than anticipated
Coordinated price cuts by major iron ore producers

Sector Rating

Cautious: The steel sector is expected to underperform the benchmark by more than 10%.

Additional Information

The GFS China Pulse Check series offers monthly updates on various sectors, including:

Steel Sector: Supply and demand analysis, raw material prices, steel and iron ore prices, and market outlook.
Steel Trade Data: Exports, imports, profitability, and outlook.
Crude Steel Output: Monthly and daily output data and forecasts.
Coal Sector: Prices and analysis of thermal coal, coking coal, and anthracite.
Property Sector: Policy review, transactions, land supply and sales, and liquidity.
Auto Sector: Sales, raw material costs, and market trends.
Building Materials Sector: Cement and glass output and prices, as well as downstream industry growth.

Disclaimer

This report is for informational purposes only and does not constitute an offer to buy or sell securities. It is intended for use by clients of GF Securities (Hong Kong). The information may be subject to change and is not guaranteed. Investments involve risks, and past performance does not guarantee future results. Readers should seek professional advice before making investment decisions.