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【出版时间及名称】：2009年11月韩国钢铁行业研究报告
【作者】：
【文件格式】：pdf
【页数】：36
【目录或简介】：
Profit momentum to return in 2010
OVERWEIGHT on steel/nonferrous metal sector We retain our
OVERWEIGHT rating on the steel/nonferrous metal sector in 2010. The global
steel market declined in 2009 amid the global financial crisis after peaking in
2008. The decline should be seen as a hard landing, something that does not
come with a normal industry cycle. The market will rebound gradually in
2010. Global steel demand dropped at a double-digit pace in 2009 on weak
demand for durable goods. However, steel consumption is estimated to grow
9% YoY in 2010 on economic growth driven by China and India, and a
recovery in developed economies. Capacity utilization at steelmakers will rise
on inventory restocking in the U.S and Europe. Global steel production
capacity has dropped substantially from the levels seen in the mid-2000s
amid a flurry of new facility expansions, but industry-wide consolidation
efforts and the Chinese steel industry’s restructuring are positive.
International flat steel prices to rise in 1H10 International flat steel
prices have declined since hitting a high in November of last year. Prices
are estimated to hit bottom in 1Q10. First, China's low-price steel product
exports will likely decline on a drop in domestic inventories. Second,
China’s flat steel prices have begun to recover on production cutbacks and
growing public/private investments. Third, shipments are projected to rise
on inventory restocking in the U.S. and Europe that will last 6-8 months.
Long product market is the largest beneficiary of China’s consolidation
move China is scheduled to announce an ordinance soon about steel
industry consolidation aimed at forcing noncompetitive steelmakers out of
the market and addressing issues like steel oversupply and pollution. The
long product market will benefit the most from the country’s consolidation
move because these small- and medium-sized steelmakers mainly
manufacture long products. As a result, long product margins in both China
and Asia are expected to grow rapidly amid tighter supply conditions.
Top picks: Hyundai Steel, Korea Zinc We suggest Hyundai Steel and
Korea Zinc as the top picks in the steel/nonferrous metals industry. Hyundai
Steel (BUY, fair value: W105,000) is the biggest beneficiary from the
structural reforms of Chinese small and medium-sized steel companies,
which is expected to enhance Hyundai’s bargaining power in the domestic
market. The ramp-up of Hyundai Steel’s new blast furnace will help increase
its market share within the captive market currently monopolized by POSCO.
Korea Zinc (BUY, fair value: W260,000) is set to deliver an improved 2010
performance on the back of metal price strength offsetting the weak dollar
and the ramp-up of a new facility raising byproduct treatment capacity.
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