China is still in the middle of industrialization and urbanization, and there is still huge room for the development of special steel industry. The advancement of industrialization and the improvement of urbanization will drive the growth of demand for special steel industry.
Among the products of domestic special steel enterprises, the middle and low-end products account for a large proportion; The special steel products of medium and high-end plates and strips still rely on imports; Due to the high technical process and product equipment requirements of special steel, long construction period and large capital investment, it is difficult to significantly improve the supply capacity in the short term, and it is difficult to significantly adjust the product structure; Therefore, the gap between supply and demand will still exist, and high-end varieties will benefit for a long time.
It is expected that the consumption of special steel in the traditional downstream and emerging industries will increase significantly in the next five years. China's special steel has broad prospects for development; If we analyze from the downstream demand, on the one hand, the traditional downstream industries such as automobile and machinery manufacturing continue to maintain stable and rapid development, which will increase the demand for special steel; On the other hand, the rapid development of strategic emerging industries, especially high-end equipment manufacturing industry, will also increase the consumption of special steel under the strong promotion of national policies.
According to the statistics of China Special Steel Association, the main consumption areas of China's special steel are automobile and machinery industries. The proportion of special steel consumed by the two industries reaches 40% and 32% of the production of special steel respectively.
China's automobile industry has experienced sustained and rapid development since 2002, with a compound annual growth rate of 23.6%. The Ministry of Industry and Information Technology plans to produce 23 million to 31 million vehicles by 2015 during the 12th Five-Year Plan period. According to the empirical data of steel consumption in various parts of automobile manufacturing, we estimate that the average steel consumption for a passenger car is about 1 ton, while the steel consumption for commercial vehicles is about 9, 4, 1.5 and 0.8 tons in the order of heavy, medium, light and slight, with the average proportion of excellent and special steel accounting for 30%. It is estimated that the market demand for special steel for automobile production will increase from 8.8 million tons in 2010 to about 13 million tons in 2015 according to the growth rate of neutral hypothesis.
The historical data shows that the output value of non-automotive machinery industry has a strong linear relationship with the consumption of special steel, and the fitting effect is good; Based on the optimistic, neutral and pessimistic growth rate of output value of 10%, 15% and 20%, we can estimate that under the neutral assumption, the demand for special steel in China's non-automotive machinery industry will be about 24 million tons in 2015, an increase of about 9.5 million tons compared with the demand for special steel at the end of 2010.
The special steel industry, especially the high-end special steel, has been listed in the national seven strategic emerging industries plan. The policy drive will bring new impetus to the development of the special steel market. The development of other strategic emerging industries, especially the high-end equipment manufacturing industry, will have a huge pull on the demand for high-end special steel. It is estimated that the demand for special steel in China will exceed 50 million tons in the next five years, of which the new demand of high-end equipment manufacturing industry will account for more than 10%, and most of the special steel required are high-end varieties.
The proportion of medium and low-end products in China's special steel varieties exceeds 60%. Comparing the low, medium and high-end product structure of special steel products in China and Japan, it can be found that the proportion of low-end products in China is more than 60%, while the proportion of high-end products is far lower than 46% in Japan.
According to the data of China Special Steel Association, at the end of 2011, more than 70% of the products of 36 major special steel enterprises in China belong to non-alloy steel and base alloy steel, while less than 30% of the products can be truly called special steel.
The gap of medium and high-end special steel will still exist for a long time. In 2011, the output of special steel in China was about 30 million tons, and the annual import volume basically remained above 3 million tons, accounting for more than 10%. From the comparison of the quantity and price of the import and export of special steel products in China, it can be seen that the import demand of special steel plate and strip is very large, and the average import price of almost all varieties is significantly higher than the average export price, which indicates that China imports mostly high value-added and high-end special steel products, while exports more are low-end products, highlighting the unreasonable product structure of China's special steel industry.
Special steel products have strict requirements for purity, stability, hardness and other indicators, and also have very high requirements for production equipment and manufacturing process. The production process and equipment required for special steel production, such as secondary refining, vacuum induction furnace, vacuum electric arc furnace, and high-precision forging and rolling machines, are highly specialized and have large capital investment; It takes more than 24 months from the procurement plan to the equipment entering the factory and putting into operation, and the construction cycle is long.
Due to the long construction period of special steel production equipment and large investment in product research and development, the supply capacity of China's special steel enterprises cannot be significantly improved in the short term as that of ordinary steel enterprises, and the product structure cannot be significantly adjusted. Assuming that the annual growth rate of China's special steel production in the next five years can be maintained at the previous average level of 17%, the supply and demand gap of the special steel market will continue to exist in the next five years.
By comparing the income proportion of different steel varieties of five domestic listed companies, it can be seen that the proportion of alloy steel of Daye Special Steel and Fushun Special Steel is about 80%, far more than that of other listed companies; The proportion of special steel in Fangda Special Steel is the lowest.
Daye Special Steel has advantages in management and outstanding profitability. By analyzing the sales gross profit rate of listed companies, we can see that Xining Special Steel has the highest sales gross profit rate, which is related to their strategy of extending upstream to reduce product costs; Daye Special Steel is very prominent in the weighted ROE. Although its product sales gross profit rate is not the highest, the ROE has basically maintained the highest level among listed companies in five years, which also reflects the company's management advantages.
High-end product structure and management advantages are the two biggest competitive highlights of Daye Special Steel. The supply and demand gap of special steel industry during the "12th Five-Year Plan" period is mainly caused by the insufficient supply of high-end products. As the enterprise with the highest proportion of high-end products in listed companies, Daye Special Steel will undoubtedly maintain its competitive advantage in the foreseeable future; It is better than other listed companies in terms of management and can give shareholders more stable returns. The current P/B of Daye Special Steel is 1.8X, lower than the historical average of 2.6X, with a high margin of safety.
