From rapid growth to sailing

For the first time, the stainless steel industry was covered, and an "overweight" rating was given. Stainless steel demand is growing steadily, the industry profitability is better, focusing on recommending stainless steel production enterprises TISCO stainless steel (000825. SZ), Jiugang Hongxing (600307. SH), stainless steel processing enterprise Yongjin Shares (603995. SH), Sidley Xintai (300881. SZ）。 TISCO stainless steel, wine steel Hongxing is China's stainless steel leading enterprises, stainless steel production capacity of about 400, 1.2 million tons respectively, the two companies continue to deepen the stainless steel industry, stainless steel business strength continues to rise. Yongjin Shares, Sidley Xintai are stainless steel downstream processing enterprises, with their own production capacity successively put into production, the performance will be gradually released.

The demand for stainless steel is growing steadily, and the future space is vast. The downstream demand for stainless steel is dominated by durable consumer goods and industrial demand, and the demand is rising in cyclical macroeconomic fluctuations. According to ISSF data, from 1980 to 2019, the compound growth rate of world stainless steel production was 5.13%, higher than other metal materials such as general carbon steel and aluminum, and also higher than plastics in non-metallic materials. China is the world's main consumer of stainless steel, accounting for more than 50% of the world's stainless steel consumption, 2013-2020 China's apparent stainless steel consumption compound growth rate of about 7%. The downstream demand for stainless steel is extensive, and we expect that the downstream demand for stainless steel in China will continue to grow, and the future space of the industry is vast.

Stainless steel supply concentration is high, new production capacity is gradually put into operation, production capacity goes to sea, sail away. In 2020, China's stainless steel production accounted for 59.2% of the world's total output, and it is the world's stainless steel producer. From 2001 to 2020, the compound growth rate of stainless steel production in China was 20.45%, and China's stainless steel industry grew rapidly. At present, China's stainless steel production capacity is about 35.8 million tons, according to our calculations, China's stainless steel production capacity under construction is still about 10 million tons, the future stainless steel production capacity will continue to grow. In addition, limited by the shortage of nickel resources in China, China's stainless steel enterprises actively go to sea to build new production capacity, the current Qingshan, Delong and other companies in Indonesia layout of stainless steel production capacity has been successfully operated, the future of China's stainless steel industry will continue to sail far.

The dependence on raw material imports is relatively high, and enterprises have gone to sea to find raw materials. The cost of 300 series stainless steel accounts for more than 60% of nickel-iron, which is the main component of the cost of stainless steel. China's nickel resources are relatively scarce, mainly relying on Imports from Indonesia and the Philippines. Due to the large fluctuations in Indonesian and Philippine policies, Chinese enterprises take the initiative to go to the sea to find nickel resources, at present, the path of new nickel iron production capacity of Chinese enterprises in Indonesia has been completely opened, and the degree of autonomy of raw materials in China's stainless steel industry may continue to rise.

Risk warning: raw material cost risk, new production capacity growth rate is too fast.

This article originated from the financial world