Since the supply-side structural reform, the state has vigorously eliminated backward steel production capacity, while prohibiting new production capacity, resulting in the current steel production capacity becoming a scarce indicator, the production capacity acquisition cost is getting higher and higher, and the industry entry threshold is obviously improved.
However, iron and steel enterprises with compliant production capacity and high production capacity will have more significant scale effect and have certain advantages in fierce market competition.
The demand for steel is closely related to the industrialization process of a country. During the "Tenth Five-Year Plan" period, China will be in the transition period from the late stage of industrialization to the post-industrialization stage, and China's steel consumption will enter the peak platform area, and the steel consumption will maintain a high level throughout the year.
Production process of iron and steel industry;
In the past few years, no matter whether the steel industry is a bull or a bear, structural opportunities in the industry have always existed.
On the one hand, the steel industry chain includes upstream iron ore production and upstream supporting facilities (refractories, coking products, electrodes, etc.). ), downstream extension processing (steel pipe, plate, wire rope, etc.). ) and metal products, as well as trade flows.
The industrial chain is long enough, and the flow of industry profits in all links of the industrial chain is easy to bring various investment opportunities.
On the other hand, from top to bottom, the structural adjustment of overlapping economic growth cycles brings opportunities for the vigorous development of sub-sectors and the transformation of enterprises driven by policies.
Source: iResearch.
Upstream of iron and steel industry chain: iron ore mining and beneficiation
Iron ore refers to the ore containing economically available iron, which is an important raw material for steelmaking. However, the mined iron ore raw material cannot be directly put into blast furnace for ironmaking, and it must go through a series of operation processes to become clinker.
Iron ore is the most consumed and complicated basic raw material for iron and steel enterprises. High-grade rich ore is processed into lump ore, part of fine ore and a small amount of iron concentrate, while low-grade poor ore is processed into iron concentrate through poor ore dressing, in which the treatment process of poor ore is longer than that of rich ore and the treatment cost is higher.
The main operation processes of iron ore production line include mining, mineral processing and briquetting.
Iron ore industry chain:
From the perspective of industry concentration, iron ore oligopoly has obvious characteristics, and the giants have a strong voice.
The output of Valles. A, Rio Tinto, BHPBillitonPlc and FMG(FortescueMetalsGroupLtd) are four international mines, accounting for about half of the global iron ore production, of which CR4 reaches 50% (Vale's share only decreased due to the dam break of 20 19).
Vale plans to achieve an annual output of 400 million tons of iron ore by the end of 2022, and will invest to expand the annual production capacity to 450 million tons in the future. Other mines have no obvious capacity expansion projects, and capital expenditures are mostly used for replacement projects to maintain existing capacity.
Source: Mysteel, Pacific Securities
Domestic iron ore reserves are high, but the grade is relatively low; In order to make domestic lean ore meet the conditions of charging, the beneficiation process is long, the beneficiation cost is high and the dependence on foreign ore is high.
The concentration of domestic iron ore industry is still lower than overseas, and there are mainly seven large-scale mining areas: distributed in North China, Northeast China, Central China, East China, Southwest China and Hainan.
Judging from the current ownership nature of iron ore enterprises in China, most of them are state-owned iron ore enterprises. Among the 26 key iron ore enterprises counted by Steel Union, 2 1 is a state-owned enterprise, accounting for 80.77%.
General situation of major large mining areas in China:
Source: China Industrial Insight Network, distribution and characteristics of iron ore resources in China.
Upstream of Iron and Steel Industry Chain: Coking Coal Market for Fuel Equipment
Coking coal, also known as main coking coal, has low volatile matter and good coking performance, and is the main coal for coking production.
By province, Shanxi has the largest output (accounting for 47%), followed by Shandong (accounting for 10%), Anhui (accounting for 9%) and Inner Mongolia (accounting for 6%).
The increase of national coking coal output in 2020 mainly comes from the release of new production capacity of some coal mines in Shanxi and other provinces. 2020 is a big year for trial operation and production of new mines in Shanxi Province. Compared with 20 19, the whole year of 2020 and the beginning of 20021,the National Development and Reform Commission and the Energy Bureau did not approve new coal mine projects in Shanxi Province, and the expected production time of previously approved coal mine projects was generally after 202 1.
List of non-resource integrated coal mines in Shanxi Province (coking coal resources are red by the end of 2020):
Source: Shanxi Energy Bureau.
Domestic stock is mainly stable, with limited increment. Because of the long development history, most of the resources have been used in production and mines under construction, and there are few unused resources, so the potential of coking coal to increase production in the future is not great, and it faces the dilemma of insufficient reserve resources.
At present, domestic downstream users are increasing the purchase of domestic coal resources and seeking sources of goods in overseas markets. Considering that the productivity utilization rate of coal mines in major domestic producing areas is above 100% all the year round, some mines have been mined for many years, and resources tend to be exhausted. It is estimated that the domestic coal increment space is limited, so it is necessary to pay attention to China's imports from Canada and the United States.
Coke market
Coke, which is mostly used in steelmaking, is the main raw material in steel and other industries at present and is known as the "basic food" in the steel industry.
Judging from the coking capacity of conventional coke ovens, China's coke capacity and output are mainly concentrated in North China, accounting for about 43% of the total coking capacity, followed by East China, accounting for 22%, Northwest China ranked third with 16%, and other regions accounted for about 19%.
In terms of provinces, Shanxi, Hebei and Shandong firmly occupy the top three positions. Later, with the continuous output of new coking capacity, the dominance of Shanxi coking capacity is still difficult to shake.
Middle reaches of iron and steel industry chain: smelting and processing
Judging from the demand distribution of the steel industry, the downstream demand of Pugang is mainly concentrated in the construction industry, which is also the highest part of the whole industry, accounting for 50%. Special steel, steel pipe and section steel are widely used in railway equipment, petrochemical industry, construction machinery, automobile and other industries.
According to the data released by the National Bureau of Statistics, in 2020, the top ten provinces and cities in China are Hebei, Jiangsu, Shandong, Liaoning, Shanxi, Anhui, Hubei, Henan, Guangdong and Inner Mongolia. Among them, the output of crude steel in Hebei Province ranks first, with a cumulative output of 249.7695 million tons.
At present, China's crude steel production capacity ranks first in the world and it is the largest steel producer in the world; Except for a few provinces, the iron and steel industry is distributed all over the country, among which Hebei Province is the largest province in crude steel production, accounting for 25.56% of the total crude steel production in the country.
At present, the three major special steel producing areas in the world are Japan, Europe and China. China is a big producer of special steel, but its proportion is low, and its products are mainly low-end products.
In 2020, the profitability of special steel plates will continue to be stronger than that of ordinary steel plates;
Source: Ping An Securities
The production of special steel die steel is highly concentrated, and there are three main types of domestic manufacturers: established steel mills, scientific research institutes and foundries. Steel enterprises mainly focus on mass production, research and development, and foundry mainly focuses on processing; Oligopoly makes it harder for latecomers to enter.
The output of Tiangong International, Northeast Special Steel, Pangang Changgang, Everbright Special Materials, Baosteel and Qilu Special Steel accounts for more than 80% of the total domestic market, and gradually concentrates.
The market of high-speed steel is even smaller than that of tool and die steel, belonging to high-alloy steel in high-end special steel. At present, domestic supply is still in the rising range, and the concentration within the industry is not obvious, and the industry concentration is only 35.8%.
At present, the two major suppliers in the industry are Tiangong International and Hebei Metallurgy. In terms of foreign supply, most high-end high-speed steel products are monopolized by foreign companies, and the main competitor of domestic companies in the field of high-speed steel is French company Erasteel.
Downstream of iron and steel industry chain: high industry concentration.
Compared with the steel industry, the concentration of the main downstream steel industry is high, and the right to speak in the steel industry is relatively lacking.
The downstream demand of steel mainly comes from the construction industry, and its direct demand accounts for about 55% of steel consumption. At the same time, it will stimulate the indirect use of steel in construction machinery, heavy trucks and household appliances, and the direct and indirect construction industry accounts for about 75%. Therefore, the core change of steel consumption is the construction industry, which is mainly infrastructure and real estate.
The downstream demand of iron and steel industry has two characteristics: one is easily influenced by the fluctuation of demand in real estate and other construction industries, and the other is widely distributed, which also means that the downstream industry is prone to the situation that the east is not bright and the west is not bright.
This also determines that in the process of economic growth downturn and economic restructuring, iron and steel often have opportunities to subdivide sub-industries, including opportunities related to counter-cyclical and steady growth industries during economic downturn, opportunities related to high-end equipment industries during economic restructuring, and opportunities such as elastic recovery of extended processing profits under cost reduction. These opportunities often appear in leading companies of steel pipes, special steels and metal products.
Market structure of iron and steel industry
Judging from the competition pattern of steel industry, the acceleration of merger and reorganization of leading enterprises is a highlight of the industry competition pattern in 2020.
Since 2020, the merger and reorganization of leading enterprises in the industry has accelerated. Baosteel acquired the controlling stake in Taigang, reorganized Chongqing Iron and Steel and managed Sinosteel; Fangda Group reorganized Sichuan Dagang; Ye Jing Group reorganized Yunnan Yongchang and Guangdong Taidu Steel Works; Stegosaurus manages Shaanxi Haiwei Iron and Steel Company; Hebei Jigang, headed by Yuhua, reorganized Wu 'an Xinghua, Wenfeng, Tangshan Port and Land through asset operation. August 1 Day Xinjiang Steel Plant Reorganization, etc. , has made positive progress and phased effect, industry concentration is expected to further improve.
Supply-side structural reform has set a clear goal for the adjustment of industrial organizational structure: by 2025, the supply-side structural reform of the steel industry has achieved remarkable results, and 60%-70% of the output of China's steel industry will be concentrated in large groups around 10, including 3-4 steel groups with 80 million tons, 6-8 steel groups with 40 million tons, and some specialized steel groups.
Industry status is often formed by asset scale, production capacity scale, market share, profitability, competition and enterprise history.
The peak of carbon dioxide emission and carbon neutrality will have a far-reaching impact on China and even the global steel industry, or it will be more than a round of supply-side structural reform.
In the next 3-7 years, the steel industry will form a pattern of industry-leading super-large enterprises, industry-leading specialized enterprises, regional leading enterprises and regional characteristic enterprises, market competition will gradually move towards order, and industry concentration will be significantly improved.
Although the replacement project has entered the peak production period in 2020, the volume of 202 1 is still relatively large due to the delay of some projects and the consideration of the output climbing period. After that, this round of capacity expansion will come to an end, and it is expected that the capacity increase will be less in 2022.
In the short term, achieving the "peak carbon dioxide emission" in the steel industry through "de-capacity" will reshape the profit distribution of the upstream and downstream industrial chains of steel and have an important impact on the price trend of bulk commodities; In the medium and long term, achieving carbon neutrality in the steel industry through capacity transfer and long-short process switching will greatly change the supply and demand pattern of the global steel industry.