Stainless Steel----Stainless steel prices sharp increased , TISCO is first to benefit
Due to Indonesian restricted nickel ore exports and the impact of the Russian political tension Vale overhaul and other factors, the price of nickel chain has recently been rising since mid-February, imported laterite nickel ore , Wuxi, electrolytic nickel, nickel-iron alloy Shanxi (FeNi12-13 ) prices rose by 128% , respectively , 50.2% and 30%. Further more stainless steel prices compensatory growth began to accelerat since late April, generally within three weeks rose to 14% ( 2000 yuan / ton ) around .
Stainless steel chain prices , steel mills will be benefit.
Stainless steel chain prices increase, the stainless steel production enterprises that we believe constitute good from four aspects:
1 ) the upstream part of the steel master nickel ore , ferronickel resources or a larger amount of stock , will benefit from asset appreciation . For example, TISCO 2014Q1 reached 11.6 billion yuan at the end of inventories ;
2 ) the total chain widening profit margins , smelting sectors as one of the rings , the profit will also rise ;
3 ) Ni major steel raw material procurement usually FOB long association mode or monthly pricing model , and finished products mainly for market pricing , so the short-term will benefit from the production cycle ;
4 ) the price of nickel ore supply shortage impact , if sustained medium-term shortage , the steel plant will face cuts , resulting in market share shuffle, and the availability of resources , industry leading productivity advantages will win.
Sustained judgments , as well as stainless steel stocks opportunity.
Stainless steel stocks , the fundamentals have been identified to improve , but whether the trend of investment opportunities arise , still depends on continuing to rise . We believe that the future price of stainless steel can be divided into two phases to consider:
1 ) Stainless steel ex-factory price increases are lagging behind , now the process has continued, which will bring a strong post-market prices will cost the support ;
2 ) the probability of large steel companies the resumption of production , due to the overcapacity in the industry as a whole , complex postpartum price inflation pressure even consolidation or correction ; but the signs have appeared insufficient supply of raw materials , lack of future if sustained , then digest the raw material inventory mills will face cuts , thereby push to start the second wave of steel prices , greater flexibility rise, profits will rise more quickly .
Specific to the investment opportunities :
a) If there is a second case, then the trend opportunities arise. However , due to shrinking supply of nickel ore by foreign policy, political factors, sustainability still some uncertainty ;
b) does not occur even if the second case , considering the current steel stocks generally underestimate the value ( such as industry leader TISCO not rust currently only 0.6 times PB), and the market for the nickel industry chain high degree of concern and enthusiasm related stocks are expected to remain at least a wave of trading opportunities.
TISCO subject of a good choice .
A shares in stainless steel production enterprises are mainly four : TISCO , Jiuquan Hongxing , Xining Special Steel , Daye Special Steel . From flexible, valuation perspectives into account, we believe that TISCO is preferred, Jiuquan Hongxing is followed by :
1 ) Flexible angle. Xining , Daye both small production ( tons or less , almost negligible ) , a low proportion of the Group's Jiuquan Steel , TISCO is the largest of flexible stainless steel - stainless steel prices to improve profit rose 100 yuan per 0.07 ( equivalent to 2013 80% ) .
2 ) a valuation perspective . TISCO solid results , is one of the few consistently profitable domestic steel mills , but the current PB is only 0.57 times lower than most steel companies , compared to other nickel industry chain -related companies lower.
3 ) long-term competitiveness . TISCO in technology, equipment, and control of resources and other advantages will gradually reflect the long-term , such as the company in recent years, duplex stainless steel , nickel-based alloy OCTG , the AP1000 nuclear reactor components with 304,304 H stainless steel, ultra- supercritical power plant boiler SUPER304H and HR3C seamless fusion made the first breakthrough with a large thickness of copper, stainless steel composite panels , and many other new products in the field , the future will fully benefit from the development of nuclear power, thermal power, boilers and other industries ; another company in the iron ore, nickel, chromium , and many other control of resources have also been involved ; while technological aspects such as nickel- iron- nickel ore and other alternative technologies also have a clear comparative advantage .