Recently, projects have started in Henan, Hunan, Sichuan, Zhejiang, Anhui, Shaanxi, Shandong and other provinces, and construction works will resume in 2021 earlier than in previous years.Agency data showed that the iron and steel industry in February improved significantly, showing a low - season market.Industry insiders said that with the gradual development of construction projects, steel demand will continue to volume.And under the support of the cost, steel prices still have room to rise.

Recovery of prosperity

Agency monitoring data show that in February, although the steel industry is still in the traditional off-season, but affected by the rapid economic recovery, downstream demand climbing expectations, the boom improved significantly.According to the recent steel market price performance, before the Spring Festival, the spot market transaction is light, and because the winter storage price is higher than in previous years, the market merchants are not willing to winter storage;After the Spring Festival holiday, in the cost of strong support and market demand expectations to promote factors, the domestic steel market is a rapid rise in the market.

Against this background, the sales index and order index of steel circulation enterprises in February were 41 and 41.4 respectively, up 0.2 and 1.1 percentage points respectively from the previous month.

According to the platform statistics released by the iron and steel distribution industry in February 2021, the total PMI was 48.3, 3.1 percentage points higher than the previous month.From the sub-index, the composition of the iron and steel circulation industry PMI 10 sub-index 9 rose 1 fell.Among them, sales volume, sales price, total order quantity, purchase cost, arrival speed, inventory level, enterprise employees, trend judgment and purchase intention of nine indexes increased, only one index of financing environment slightly decreased.

With the improvement of the epidemic situation, the world economy will continue to recover. Although the flat material market price has experienced a rapid rise in the early stage, the demand is still expected to be strong in the later stage, and the price in March will still be easy to rise and difficult to fall.

Key projects started in succession

China Securities Journal reporter learned that recently, Henan, Hunan, Sichuan, Zhejiang, Anhui, Shaanxi, Shandong and other provinces have started projects, construction in 2021 will resume earlier than in previous years.

2021 is the first year of the 14th Five-Year Plan.At present, Guangdong, Shandong, Henan, Hebei, Shaanxi, Liaoning, Yunnan, Beijing and other provinces have clarified their investment plans for key construction projects in 2021, and their total investment in key projects in 2021 has exceeded 34 trillion yuan.The "two new and one heavy" projects, represented by new infrastructure, new urbanization, and major projects such as transportation and water conservancy, will be concentrated. Transmission and integration infrastructure, mainly based on rail transit, will also be key construction projects in various regions.Infrastructure is expected to continue to gain momentum in 2021.

Industry insiders said that in 2021, China's economy will continue to recover, driving further growth in steel demand, crude steel apparent consumption growth is expected to be more than 2%;The Ministry of Industry and Information Technology may develop supporting programs related to production reduction in the future, which will help improve the relationship between supply and demand in the market.

Recently, the Ministry of Finance, the National Development and Reform Commission jointly issued the "on carding 2021 new special bonds project funding needs to notice is put forward, in 2021 the new special bond focus for transportation infrastructure, energy, agriculture, forestry and water conservancy, ecological and environmental protection projects, social undertakings, cold-chain logistics facilities in urban and rural areas, municipal and industrial park infrastructure, national major strategic project, 9 areas of low-income housing projects.According to the current PPP project database of the Ministry of Finance, the proportion of "two new and one heavy" projects in the database is constantly increasing, and the total investment scale of PPP projects in 2021 is expected to exceed 4.5 trillion yuan.

bullish

Industry insiders pointed out that in February, the domestic steel market shock up, iron ore, coke prices firm support for late steel prices is still strong.With the gradual development of construction projects in March, the demand for construction steel will continue to increase, and the steel social inventory will enter the phase of de-processing.Supply and demand relationship improvement superimposed cost support, is expected to March domestic steel prices still have some room to rise, but the need to be alert to the high callback risk.

On the cost side, iron ore prices remain firm.In February, the average price of 66% grade dry base iron fine powder in Tangshan area was 1296 yuan/ton, up 92 yuan/ton compared with last month, up 7.6%;In terms of imported iron ore, the average market price of 61.5% Australian powder ore at Rizhao Port is 1130 yuan/ton, down 10 yuan/ton compared with last month, down 0.9%.In February, the price of coke is still at a high level, the monthly average price has increased significantly compared with the previous month.Among them, the average price of Tangshan secondary metallurgical coke is 2781 yuan/ton, up 166 yuan/ton compared with last month, up 6.3%.

In terms of social inventory, from 2018 to 2019, steel social inventory is basically 3-4 weeks after the Spring Festival to reach the stock peak;In 2020, due to the impact of the epidemic logistics smooth and downstream resumption of production, steel stock reached the stock peak in 7 weeks after the Spring Festival;In 2021, the Spring Festival is later than in previous years, and the weather conditions are favorable for construction after the Spring Festival, coupled with the local workers in the New Year, and the pace of work is significantly accelerated after the Spring Festival. It is expected that the peak of steel social inventory will be reached in mid-March this year, and the destocking cycle will start.

The current iron ore, coke prices still maintain a high operation, the cost of late steel price support is still strong.Recently, Tangshan, Handan, Baoding, Cangzhou, Qinhuangdao five initiated heavy pollution weather II response, especially Tangshan region to increase the treatment of gaseous pollutants in iron and steel enterprises, the launch of iron and steel enterprise project emission reduction depth management daily system, will be the key areas of the release of related steel products to curb.In March, as major engineering projects around the country entered the implementation stage, the demand for steel will be gradually released, in the cost and demand jointly promoted, steel prices still have some room to rise.