Jun 24,2019 Steel Knowledge.
1) Macroeconomic and financial data stabilized, steel demand picked up, and industry sentiment improved. From January to April, the economic data was steadily improving, especially for real estate investment, new construction area growth rate, housing sales area and infrastructure investment growth rate, and steel demand showed signs of recovery.
2) “China US trade war” has less impact on the industry and brings industry investment opportunities: this trade war has less impact on industry profits. According to our Sino-US steel import and export trade calculation model, exports due to tariff adjustment reduction The profit amount only accounts for 0.011% of the industry's profit; the export steel profit accounts for only 0.036%-0.071% of the total profit of the industry. The future development of Sino-US trade war has limited impact on the steel industry.
3) “One Belt and One Road” to boost the steel industry: Overseas investment + steel processing + upstream and downstream. In the second session of the Belt and Road Summit, China has developed rapidly in the areas of economic and trade cooperation, infrastructure construction and investment with countries along the route in the past five years. The future development prospects are broad and will boost steel demand.
4) Problems and suggestions facing the industry: High-quality mines are subject to overseas pressure, capacity expansion pressure, unreasonable industrial structure, ineffective low-end production capacity to be cleared, medium and high-end features insufficient technical capacity, and export facing double-reverse issues. It is recommended to improve the fundamentals of the industry by acquiring overseas high-quality mines, continuously optimizing the supply and demand relationship of the industry, optimizing the industrial structure according to local conditions, and strengthening the innovation ability to develop high-end steel.
5) Investment Opportunities: Environmental protection, mergers and acquisitions and industrial upgrading will become important development directions and investment opportunities for the future industry. At present, the valuation of the steel industry is at a historically low level, and below the market average, the investment safety margin is relatively high.