According to the China Steel Association, in early March 2024, according to key statistics, steel companies produced a total of 205.77,800 tons of crude steel, 18.4.376 million tons of pig iron, and 19.2762 million tons of steel. Among them, crude steel production was 2,058,800 tons per day, down 3.38% from the same caliber, 4.36% from the same period last year, and up 5.05% from the same period last year; pig iron production was 1.843,800 tons, down 1.82% from the same period last year, down 3.97% from the same period last year, and the same caliber increased 5.77% from the same period last year; steel production was 1.927,600 tons per day, down 6.65% from the same caliber, down 4.81% from the same period last year, and the same caliber increased 0.73% from the same period last year.
On January 8, the Ministry of Industry and Information Technology held a symposium on promoting green and low-carbon industrial development. The conference emphasized the need to steadily promote carbon emission reduction in the industrial sector, promote carbon peaks in industry and key industries such as steel, building materials, petrochemicals, and non-ferrous metals in an integrated manner, vigorously develop green and low-carbon industries, promote the green upgrading of traditional industries, and accelerate the synergy of pollution reduction and carbon reduction.
CICC released a research report saying that the steel industry is currently at the bottom of history, and market expectations are pessimistic. The bank believes this means that the industry has a high margin of safety and a high risk-to-benefit ratio, and should not be pessimistic. Looking ahead, if demand during the peak season is fulfilled, negative feedback will be unsustainable, commodities are expected to rebound, and sector valuations may be further repaired. Furthermore, as the fundamentals of the furnace material side weaken, compounded by seasonal restoration of demand during peak seasons, supply and demand for finished materials have improved markedly, and industry profits are expected to gradually recover. Thanks to the low inventory environment for exports and domestic industrial finished products, the bank is more optimistic that steel manufacturing companies will take the lead in breaking out of the profit trough.
At present, China's steel prices still have a clear advantage compared to other major overseas exporters. The bank estimates that the average price difference as of February was 65 US dollars/ton, which is still at a good level. Furthermore, in the context of steady growth, fiscal policy will remain active. The bank believes that infrastructure commencement is expected to maintain a good level to support demand during the peak season.
CICC believes that demand in the steel industry will continue to be fragmented in 24, and the manufacturing industry is superior to the construction industry. The underrated leading steel companies in the manufacturing industry are expected to gradually recover their profits and valuations, and excess profits can be expected.
Hong Kong stock related concept companies:
Angang Steel Co., Ltd. (00347), Maanshan Iron & Steel (00323), Chongqing Iron and Steel (01053), China Oriental Group (00581)