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Steel market: The steel market continues to fall. Last week, the market price of rebar in Shanghai fell 180 yuan/ton, and the national average price fell 263 yuan/ton. Hot rolled steel declined more than rebar, and the average price dropped by nearly RMB 300/t. The previously strong cold-rolled products also fell by RMB 138/t. At present, the impact of various factors is still negative. On the macro level, the possibility of a second bottom of the global economy has continued to increase, while the domestic economic growth rate continues to slow down and monetary policy is expected to remain tight.
Raw materials: On October 21st, the price of Indian ore outer plate fell to 155 USdollars/ton, down by US$11/ton from the previous week. Domestic mines also started to decline again after two weeks of stabilization, falling by RMB 140/t during the week. Import mine stocks are temporarily stable. On the 21st, Mysteel collected a total of 92.22 million tons of iron ore in key ports, an increase of 50,000 tons from the previous week. According to the survey, on the one hand, the steel mills have slowed down the rhythm of iron ore procurement, mainly to consume port stocks. However, on the other hand, Billiton has continuously increased the volume of tendered shipments and increased its delivery efforts to China, which has also led to a rise in shipping charges.
Profitability: The profitability of steel products continues to deteriorate. After the National Day, the price of iron ore and scrap dropped sharply, and the production cost of steel mills continued to decrease. According to the cost model, the cost on the 20th decreased by RMB 74/t from the previous week. In terms of profitability, the decline in steel prices was greater than that of raw materials, and the losses of rebar and other varieties were even more severe. On the 20th, the average profit of rebar was RMB-367/ton, which was RMB 216/ton lower than the previous week. The average profit of hot rolled steel was -344. Yuan/ton, a decrease of 255 yuan/ton from the previous week.
Inventory: Traders take the initiative to reduce inventory, and social stocks fall back. The steel market is falling asleep and the market is extremely pessimistic. Traders are reluctant to order from steel mills. In order to reduce losses, their stocks are also sold as far as possible. In addition, judging from the historical laws, the social inventory on the National Day will gradually decline after a pulse. On the 21st, Mysteel's statistical social inventory was 14.78 million tons, which was 350,000 tons less than the previous week, which was basically the same as the same period of last year. Inventory of all major varieties has declined, with the largest drop in rebar, which has been reduced by 250,000 tons a week.
Price adjustment information: The ex-factory price of steel mills continues to decline significantly. With the deep correction of steel spot market prices, steel mills are also forced to continue to lower their prices. Since October, there have been a number of surprising reductions. For example, in November, Anshan Iron & Steel's hot-rolled product price is reduced by 300 basis to meet certain conditions and there are 200 more orders. Bengang directly reduces it by 500 yuan/ton. In terms of rebar, Pangang’s adjustment to the Chengdu market since August has accumulated at RMB 800/t.
Valuation and investment strategy: The steel industry is experiencing positive and negative impacts of changes in the industry cycle and economic cycles. From the perspective of industry structure, the power of iron ore prices will slow or disappear, and the relative allocation value of the steel industry will gradually increase. Faced with the adverse impact of the economic cycle: economic growth rate decline, in this phase, the economic cycle downturn has greater impact on earnings, while the industry structure and bargaining power is a long-term and slow process. From the valuation point of view, we believe that the current valuation level has basically reflected the expected decline in economic growth, maintaining the industry's "recommended" rating. Specific varieties, in accordance with our previous logic, the medium-term and long-term optimistic about the price-earnings ratio is reasonable or low companies such as Daye Special Steel, Xining Special Steel, Bayi Iron and Steel, Xinxing Cast Pipe, Baosteel and other stocks.
Raw materials: On October 21st, the price of Indian ore outer plate fell to 155 USdollars/ton, down by US$11/ton from the previous week. Domestic mines also started to decline again after two weeks of stabilization, falling by RMB 140/t during the week. Import mine stocks are temporarily stable. On the 21st, Mysteel collected a total of 92.22 million tons of iron ore in key ports, an increase of 50,000 tons from the previous week. According to the survey, on the one hand, the steel mills have slowed down the rhythm of iron ore procurement, mainly to consume port stocks. However, on the other hand, Billiton has continuously increased the volume of tendered shipments and increased its delivery efforts to China, which has also led to a rise in shipping charges.
Profitability: The profitability of steel products continues to deteriorate. After the National Day, the price of iron ore and scrap dropped sharply, and the production cost of steel mills continued to decrease. According to the cost model, the cost on the 20th decreased by RMB 74/t from the previous week. In terms of profitability, the decline in steel prices was greater than that of raw materials, and the losses of rebar and other varieties were even more severe. On the 20th, the average profit of rebar was RMB-367/ton, which was RMB 216/ton lower than the previous week. The average profit of hot rolled steel was -344. Yuan/ton, a decrease of 255 yuan/ton from the previous week.
Inventory: Traders take the initiative to reduce inventory, and social stocks fall back. The steel market is falling asleep and the market is extremely pessimistic. Traders are reluctant to order from steel mills. In order to reduce losses, their stocks are also sold as far as possible. In addition, judging from the historical laws, the social inventory on the National Day will gradually decline after a pulse. On the 21st, Mysteel's statistical social inventory was 14.78 million tons, which was 350,000 tons less than the previous week, which was basically the same as the same period of last year. Inventory of all major varieties has declined, with the largest drop in rebar, which has been reduced by 250,000 tons a week.
Price adjustment information: The ex-factory price of steel mills continues to decline significantly. With the deep correction of steel spot market prices, steel mills are also forced to continue to lower their prices. Since October, there have been a number of surprising reductions. For example, in November, Anshan Iron & Steel's hot-rolled product price is reduced by 300 basis to meet certain conditions and there are 200 more orders. Bengang directly reduces it by 500 yuan/ton. In terms of rebar, Pangang’s adjustment to the Chengdu market since August has accumulated at RMB 800/t.
Valuation and investment strategy: The steel industry is experiencing positive and negative impacts of changes in the industry cycle and economic cycles. From the perspective of industry structure, the power of iron ore prices will slow or disappear, and the relative allocation value of the steel industry will gradually increase. Faced with the adverse impact of the economic cycle: economic growth rate decline, in this phase, the economic cycle downturn has greater impact on earnings, while the industry structure and bargaining power is a long-term and slow process. From the valuation point of view, we believe that the current valuation level has basically reflected the expected decline in economic growth, maintaining the industry's "recommended" rating. Specific varieties, in accordance with our previous logic, the medium-term and long-term optimistic about the price-earnings ratio is reasonable or low companies such as Daye Special Steel, Xining Special Steel, Bayi Iron and Steel, Xinxing Cast Pipe, Baosteel and other stocks.
Waterproof Material,Geotextile,Geocell Co., Ltd. , http://www.nsgeotextiles.com