1. Hebei Iron and Steel's 2010 target for crude steel production is 25.05 million tons. If the annual production limit according to this plan will affect 18% of the output supply, that is, the crude steel production in September-December will be reduced by about 18% compared with the original plan. Exceed market expectation of reduction of large state-owned steel mills.
2. From other regions such as Jiangsu and Zhejiang, the large steel plants with large input of resource recycling and better energy consumption index are significantly less affected than small and medium-sized steel mills, which means that the majority of small steel mills in Hebei Province have reduced production of crude steel from September to December. The rate will be far beyond 18%. From the restricted production catalogue issued by Tangshan City, it is not difficult to see that the average monthly production of Tangshan's major steel mills in September-December/month before August is only 54%, which means that the production limit is 46%, which is obviously high. This ratio is 13% in Tangshan Iron and Steel.
3. The announcement of Hebei Iron and Steel has somewhat eased the market's doubts about the sustainability of the government's energy-saving and emission-reduction policies. We believe that the actual reduction in production may be due to a certain discount in the game between the steel mill and the government. In contrast, energy-saving “reduction in output†itself is still a high-probability event in the next four months, which has a positive effect on the supply and demand of the industry.
4. From the perspective of varieties, this energy-saving and emission-reduction has a greater impact on small steel plants mainly involving construction steel, and has a greater impact on long products than on sheet products. However, from the perspective of supply and demand analysis of crude steel, plates will also be affected. Obvious linkage effect.
5. Supply reduction will form a positive driving force for steel prices, but the expected decrease in cost will restrain the upside of steel prices. We believe that the effect of production cuts on industry profitability is far greater than steel prices. Reduction in supply due to production cuts and production restrictions has brought double benefits to steel companies. Steel prices have risen and raw materials have fallen. Expectations of profit improvement have been significantly better than the two steel price rises and rebounds during the previous year (steel prices and costs have risen simultaneously). 6. From the market perspective, the early stage performance of steel significantly lags behind other cyclical industries. Considering that this policy is more positive than expected, we are optimistic about the relative average market performance of the steel industry in the next quarter and maintain the industry's “optimistic†rating.
7. From the perspective of listed companies, this event will positively drive the short-term stock price of high proportion of construction steel and high profitability (low market value of ton steel), and the impact degree of large steel plants with better energy consumption indicators is also significantly smaller than that of medium and small steels. plant.
8. Risks: 1) The sustainability of steel production cuts caused by energy saving and emission reduction is uncertain, and there is a follow-up weakening or fading risk; 2) The actual impact of steel price (**, electronic trading, spot) on energy saving and emission reduction may be Excessive increase in prices and risk of late deposits.
2. From other regions such as Jiangsu and Zhejiang, the large steel plants with large input of resource recycling and better energy consumption index are significantly less affected than small and medium-sized steel mills, which means that the majority of small steel mills in Hebei Province have reduced production of crude steel from September to December. The rate will be far beyond 18%. From the restricted production catalogue issued by Tangshan City, it is not difficult to see that the average monthly production of Tangshan's major steel mills in September-December/month before August is only 54%, which means that the production limit is 46%, which is obviously high. This ratio is 13% in Tangshan Iron and Steel.
3. The announcement of Hebei Iron and Steel has somewhat eased the market's doubts about the sustainability of the government's energy-saving and emission-reduction policies. We believe that the actual reduction in production may be due to a certain discount in the game between the steel mill and the government. In contrast, energy-saving “reduction in output†itself is still a high-probability event in the next four months, which has a positive effect on the supply and demand of the industry.
4. From the perspective of varieties, this energy-saving and emission-reduction has a greater impact on small steel plants mainly involving construction steel, and has a greater impact on long products than on sheet products. However, from the perspective of supply and demand analysis of crude steel, plates will also be affected. Obvious linkage effect.
5. Supply reduction will form a positive driving force for steel prices, but the expected decrease in cost will restrain the upside of steel prices. We believe that the effect of production cuts on industry profitability is far greater than steel prices. Reduction in supply due to production cuts and production restrictions has brought double benefits to steel companies. Steel prices have risen and raw materials have fallen. Expectations of profit improvement have been significantly better than the two steel price rises and rebounds during the previous year (steel prices and costs have risen simultaneously). 6. From the market perspective, the early stage performance of steel significantly lags behind other cyclical industries. Considering that this policy is more positive than expected, we are optimistic about the relative average market performance of the steel industry in the next quarter and maintain the industry's “optimistic†rating.
7. From the perspective of listed companies, this event will positively drive the short-term stock price of high proportion of construction steel and high profitability (low market value of ton steel), and the impact degree of large steel plants with better energy consumption indicators is also significantly smaller than that of medium and small steels. plant.
8. Risks: 1) The sustainability of steel production cuts caused by energy saving and emission reduction is uncertain, and there is a follow-up weakening or fading risk; 2) The actual impact of steel price (**, electronic trading, spot) on energy saving and emission reduction may be Excessive increase in prices and risk of late deposits.
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