Shanghai And Shenzhen Two Cities Rose First In The Industry: Iron And Steel Stocks "Old Trees Blossom" Behind The Scenes

Shen Wan's steel index surged more than 5% during the session.

In June 18th, the slighted cyclical stocks suddenly rose.

Shen Wan iron and steel index rose more than 8% this week, ranking first in the Shanghai and Shenzhen two cities.

Among them, Chongqing iron and steel (601005.SH), which has just completed the management changes, is the three consecutive day of trading this week. The 000959.SZ of the Shougang Group (000959.SZ), which was launched earlier, rose by more than 62%. What led to the sudden change of steel stocks?

In twenty-first Century, the economic report noted that the first half of the iron and steel stocks' movement was related to the slightly less IDC (Data Center) concept, while the latter half was driven by many fundamental good news.

For example, the six departments such as the national development and Reform Commission issued the notice on doing a good job in solving the problem of excess capacity in key areas in 2020, demanding that the structural reform of the supply side of iron and steel industry continue to be deepened. On the same day, the coal industry mentioned was also on the same day.

In addition, on the same day, the news of the prohibition of the prohibition of the itbila comprehensive mining area was also released on the same day, and the recovery of production capacity also made a good contribution to the cost side of the domestic steel industry.

A more profound reason is that since the peak of the industry's profitability in 2018, iron and steel stocks have fallen for two consecutive years, and many steel stocks have fallen through net assets, among which more companies have long been hovering over the 1 yuan delisting line.

Storm and explore

As early as 2013, the traditional industries were at the bottom of the industry.

The situation in 2020 is not much worse.

According to the twenty-first Century economic report, the rise period began in early 2016 and ended in the fourth quarter of 2018. The decline of profitability has made the steel industry more and more concerned. In addition to a small number of special steel enterprises, other steel stocks have fallen all the way.

However, in June of this year, the steel stocks regarded as the sunset industry suddenly caught fire, and the fire was inexplicable.

In June 8th, Shougang shares suddenly stopped trading, and rapidly increased in the next few trading days. The 18 day trading was rushed to 5.47 yuan.

Two weeks ago, the company's share price was only 3.07 yuan.

Strangely, during this period, there was not much change in the fundamentals of the company. One is the company's business scope has increased in June 2nd, "telecommunications business; insurance agency business; insurance broking business..." The other is a notice of asset replacement issued in June 13th.

There is not much story in itself, but the imagination in the two level market is extremely rich.

From 1 to May this year, the strongest trend of iron and steel stocks was Shagang (002075.SZ) and Hangzhou Iron and Steel Group (600126.SH), with an increase of 117% and 101% respectively. The two companies have one thing in common: they are all involved in the IDC business.

Shougang's business scope has increased "telecommunications business", which has led to speculation in the two tier market. Should the company also turn to IDC?

With this sense of obscurity, capital continues to rise in Shougang Group. And this is not groundless. At least, the seller's steel researcher gave reasonable logic support.

For example, Huatai Securities 17 research report believes that the extension of steel business IDC business is the reuse of steel production elements. It has advantages in terms of energy consumption index, land and geographical location. "After the original capacity is relocated or withdrawn, the land is mostly idle. Steel belongs to high-energy consumption industry, energy consumption index can be reused, and some steel plants are located in or around the developed cities of the Internet industry."

Reflected in the disk, nearly two days or more of the former major cities of steel enterprises, Shougang shares, needless to say, and other Chongqing iron and steel, Nanjing Steel shares (600282.SH) and so on.

Until June 18th, fundamentals changed again. On the same day, the six departments of the national development and Reform Commission jointly issued the notice on doing a good job in solving the problem of excess capacity in key areas in 2020, involving the special inspection and inspection of steel and coal production capacity, improving the replacement of iron and steel production capacity, and promoting the implementation of annexation and reorganization of iron and steel enterprises.

Affected by this, the same downturn is still the coal stocks take advantage of the situation, the 11 stocks rose more than 5% that day.

In addition to the stimulus of the policy, the fundamentals of the steel industry have also improved. Previously, the vale of the valleys with limited capacity has been released on the same day, and the ban on the comprehensive mining area of itbila is lifted, and the output remains unchanged throughout the year.

Prior to that, the domestic iron ore futures began to soar by nearly 30% in May, due to the above news. Now the clouds are dispersed and the cost side of steel enterprises is good.

The "possible" IDC concept, superimposition policy and improvement of fundamentals have jointly created the collective rebound of iron and steel stocks this week.

The delisting of red line

The industry believes that tracking the industry level, the boom trend is downward trend, the steel industry is more than just in the short term to move forward.

In the two quarter of this year, in addition to the adverse factors of iron ore price rise, the business really improved compared with the first quarter.

Lange Iron and steel data show that the beginning of the year, billet, thread and other major steel varieties, tons of steel profits continued to decline, and in early April this year, after bottoming up. By June 5th, the average gross profit of seven varieties of steel has increased to 370 yuan / ton.

"Coke and iron ore continued to rise in May this year, coke has been rising for two consecutive rounds in June, while the Przewalski iron ore index is running above 100 US dollars. The rising cost of raw materials will further squeeze the profit margins of steel enterprises, and it is expected that the profit margins of steel enterprises will shrink in June." Wang Guoqing, director of Lange Iron and Steel Research Center, pointed out.

Under the above background, domestic steel enterprises are also raising the price of steel. Most of the products are in the range of 200 yuan to 300 yuan, and the price of hot rolled and threaded steel in July this year has been raised by 300 yuan / ton.

However, the time needed to map the fundamentals to the earnings reports of listed companies will not be particularly obvious. The main driving force to stimulate iron and steel stocks is more capital.

Look at a set of data first. Shougang shares rose from the beginning of the year to the end of 5. Of the 34 iron and steel stocks, 29 fell by an average of 18.82%.

The continuous decline of share prices has made breaking the net normal. Similarly, in May 31st, the 19 iron and steel stocks were accounted for at 56%, according to the closing price.

The most tragic one is Baotou Steel Group (600010.SH).

Baotou Steel shares the latest net assets per share of 1.15 yuan, but from April 15th this year, the company did not have a closing price of 1.15 yuan a day, until June 18th, the broad range of steel stocks rebound.

The reason is, on the one hand, the decline of the industry boom, and on the other hand is also caused by its own problems. The profit is less than 1/10 of Baoshan Iron and Steel Co., which owns two times the total capital stock.

Profits have been extremely diluted. Baotou Steel shares have been hovering below 2 yuan for two consecutive years. At the end of April this year, it fell to 1.04 yuan and was 1 yuan away from the "red line". The company also became a minority of non - delisting, non ST and non - problem companies in 1 yuan shares.

Even so, it is doubtful whether iron and steel stocks will continue to rise. After all, the industry is far from being able to compare with the level of 2018 tons of steel profits exceeding 1000 yuan.

From the perspective of capital market, there is no obvious trend of consistency. There are obvious differences between stocks.

Take north capital as an example, in recent years, it has continuously increased its stake in Shagang, and its shareholding ratio has reached a new high.

However, in June, Chongqing iron and Steel shares rose first in the Shougang Group, as well as the Sanlian plate of the steel and iron, but the north capital was sold at a stage.

In the absence of a marked improvement in the whole industry, the recent collective movement of steel stocks may be just a small episode. (Editor: Li Xinjiang)

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