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The Inflection Point Of Graphite Electrode Is Coming, Industrial Capital And Northward Fund Collectively "Add Warehouse"

2021/4/1 13:11:00 0

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Fangda carbon, a star company in 2017, had its share price rise from less than 5 yuan to 17.61 yuan in just three months.

Since then, with the decline of some specifications of graphite electrodes from 160000 yuan / ton to 16000 yuan / ton, Fangda carbon's profit and share price fell simultaneously. The company's performance forecast also shows that in 2020, the company's net profit has decreased from 5.988 billion yuan in 2018 to 1.26 billion yuan - 1.51 billion yuan, falling for the second consecutive year.

However, some industries are also quietly coming.

First, under the background of carbon neutralization, the price of graphite electrode began to rise in March this year. As of March 30, the factory price of Fangda carbon ultra-high power graphite electrode (500mm) has risen to 20000 yuan / ton, and other specifications of products have also been increased to varying degrees.

Second, industrial capital and northward capital have been collectively increased. In March this year, the number of shares held by industrial capital and northbound capital soared to 308 million from 94 million shares at the end of February.

Under the background of industrial capital, northward capital warehousing and carbon neutral, does it mean that the turning point of the industry is coming?

In this regard, the 21st century economic report reporters have learned that the recent rise in the price of graphite electrodes is mainly driven by the cost side, but as far as the overall industry relationship is concerned, there has not been too obvious improvement. However, as the price has fallen close to the break even line of the industry, the possibility of further decline is very small.

It is worth noting that the proportion of EAF steel output will increase in the next few years due to the promotion of the steel industry to achieve the carbon peak in 2025, which is expected to support the long-term demand for graphite electrodes.

Now, the "bottom" of graphite electrode industry has been proved, and the next step is to wait for the opportunity of price increase.

Climbing the "break even line"

2018 is the highlight of the whole steel industry, but Fangda carbon is the most representative stock. In that year, the net profit of the company once reached 5.988 billion yuan, almost catching up with the profit scale of Jinlongyu and Luzhou Laojiao in 2020.

At that time, the core performance driving force was the rise of graphite electrode price, because the company's carbon product capacity increase was very limited, and the sales volume in 2017 and 2018 was always around 180000 tons.

Taking ultra-high power graphite electrode (500mm) as an example, from 2016 to 2017, the factory price of Fangda carbon remained at about 20000 yuan / T for most of the time. However, since April 2017, the product has rapidly increased. Six months later, the price rose to 160000 yuan / ton.

Although the price of graphite electrode has been repeated in the fourth quarter of 2017, the price has always remained high.

As the absolute leader of the industry, Fangda carbon has made rapid progress in profitability. In 2016, the gross profit rate of carbon products of the company was 14.96%, which increased to 78.82% and 75.71% in 2017 and 2018.

The gross profit of nearly 80% is obviously not normal for cyclical industries.

It was also in 2018 that during the 13th Five Year Plan period, 150 million tons of steel production capacity was completed ahead of schedule, and the price of graphite electrode peaked ahead of schedule, and began to fall for nearly three consecutive years.

When it comes to the most difficult time in the industry, the high point of 500 mm ultra-high power graphite electrode dropped by 90%. Until January this year, the above-mentioned factory price remained at the low level of 16000 yuan / ton.

However, different from other industries, cyclical commodities have a rigid cost expenditure. Whenever the price falls below the production cost, upstream enterprises will reduce production capacity by stopping production and reducing production capacity, thus promoting the supply-demand relationship of the whole industry from surplus to balance.

Now the graphite electrode industry is in a similar stage.

"In April and may 2020, the price will fall to the bottom. According to the raw material cost and processing cost, the enterprise will lose 2000 to 3000 yuan per ton of production." Mengjingchun, an analyst with Baichuan Yingfu graphite electrode industry, said.

According to him, for the whole year of 2020, the production situation of large enterprises is stable, and the losses in the early stage can be made up by the price in the later stage. The profit situation is relatively good, while the losses of small enterprises are relatively serious.

After entering 2021, the rebound of needle coke price is the recent rebound of graphite electrode, which contributes to the opportunity of cost driven, and the profitability of the industry has been improved by stages.

Meng Jingchun pointed out that considering that some enterprises use low-cost raw materials in the early stage and sell them at current prices, some products are profitable.

According to his calculation based on raw materials and processing costs, as of March 29, the cost of some specifications of graphite electrode is 18272 yuan / ton, and the profit per ton is expected to be 870 yuan.

However, it is only limited to some specification products. On the whole, the industry has just climbed to the top of the break even line. Only the leading enterprises such as Fangda carbon can survive.

Industrial capital plus plus plus northward capital "bottom reading"

At the end of February, the total number of shares of Fangda carbon held by HSBC was 17.176 million.

And on March 25, the number of shares increased to 99.1133 million shares, and HSBC has become the largest foreign-funded seat holding the largest amount of carbon.

This is not an example. Standard Chartered Bank, Citibank and Goldman Sachs also had a collective increase in positions during the same period. The shareholding curve has become extremely steep since February.

Driven by such foreign-funded institutions, the number of shares held by northbound capital in Fangda carbon has reached a record high since the opening of Shanghai Stock connect.

In June 2018, when the graphite electrode reached a high point of 160000 yuan / T, northbound capital held 1.23% of the company's circulating shares. By the middle of March this year, the shareholding ratio was once more than 8%.

From the perspective of the change of northbound capital shareholding, it is quite certain that foreign-funded institutions will build a centralized warehouse in Fangda carbon in March this year.

The 21st century business reporter also learned that, affected by the epidemic situation, graphite electrodes in India, Japan, the United States and other countries are also rising simultaneously. Foreign institutions that see opportunities have also taken the initiative to communicate with relevant domestic institutions to understand the situation.

During the same period, some positive signals were also given in Fangda carbon.

On February 18, Fangda carbon announced that the company's directors Yan Kuixing, Shu Wenbo, supervisor Zhang Zirong, senior executives Li Jing and an min decided to terminate the implementation of the share reduction plan in advance.

On February 22, the company's chairman Dang Xijiang, director Yan Kuixing, director Liu Yinan and others announced the increase in holdings.

On February 23, Fang Wei, the real controller of "Fangda series", increased its holding of 6.87 million shares of the company through competitive trading, and announced that it would increase its holding by 100 million yuan in the next six months.

As a result, after the close of the next day, Fangda carbon was informed that Fangwei had completed the above-mentioned 100 million yuan increase plan, with the purpose of "recognizing the investment value of the company and confidence in the future development prospects of the company".

Under the demonstration effect given by foreign institutions and Fangda carbon, Fangda carbon fully digests the negative effect of the performance forecast decrease in 2020.

In terms of stock price trend, from the end of January to now, Fangda carbon has drawn a "deep V" figure, and the stock price has risen to 10.45 yuan from the low point of 6.15 yuan in early February.

As far as the outside of the industry is concerned, there are also some cases of "underpricing" of industrial capital.

Longmang Baili is a joint venture of Sichuan longmang titanium industry, the leader of titanium dioxide industry in China, and Baili, a listed company in Henan Province. Its industry position is the same as that of Fangda carbon in graphite electrode industry, and both have a high market share.

However, on March 24, longmang Baili announced that Henan Baili new energy materials, a subsidiary of the company, plans to purchase Zhongzhou carbon's new material company with cash of 292 million yuan.

Although longmang Bailey gives the positioning of "using the advantages of new materials in talent and technology to enter the graphite anode industry, officially enter the field of new energy." However, it is obvious that when the prosperity of graphite electrode industry recovers, the price of medium carbon new materials will not be the same.

Business cycle "waiting for wind"

The actions of foreign capital, internal and external industrial capital are essentially the guidance for the development trend of carbon industry in the future.

After all, it's much more important to make a statement with money than to just talk. The core logic behind it lies in the expected increment brought about by the "carbon peak" of the steel industry in 2025.

Since 2017, the output of domestic graphite electrode is relatively stable.

According to the incomplete statistics of China Carbon Industry Association, from 2017 to 2019, the domestic output of graphite electrode was 590900 tons, 65000 tons and 690000 tons, and the sales volume in the same period was 5917000 tons, 587000 tons and 669000 tons.

However, about half of them will be used for export. For example, the total export volume in 2018 and 2019 will reach 287400 tons and 397800 tons respectively. The demand of overseas market is relatively stable, but in 2020, due to the epidemic situation, enterprises will stop production more and supply will be short.

On the contrary, there is a relatively clear increment expectation in the future.

The Ministry of industry and information technology issued "on promoting the high quality development of the iron and steel industry (Draft)" in the "orderly guide short process steelmaking (electric furnace)" a separate item.

At the same time, according to the main target during the "14th five year plan", the draft also made "the proportion of EAF steel output in the total crude steel output should be increased to more than 15%, and strive to achieve 20% Requirements.

According to relevant data, in 2019, excluding the elimination of electric furnaces below 50t, there will be more than 355 new and in production electric furnaces in China, with an output of 125 million tons, accounting for 12.8% of the total output of the country.

In other words, in the next five years, there is still 7% room for improvement in the proportion of EAF steel output.

Without considering the influence of "reducing crude steel" output, and based on the output base of 1.065 billion tons of crude steel in 2020, it is equivalent to 74.55 million tons of electric furnace steel production in the future.

This increment will be transformed into potential demand for graphite electrodes in the future.

At the same time, considering that the carbon emission of electric furnace is obviously lower than that of blast furnace, the development of electric furnace will become the inevitable choice of iron and steel industry with the goal of achieving carbon peak in 2025.

For graphite electrode industry, interviewees are generally optimistic about the market demand in the next three to five years. However, in the short term, the whole industry still lacks some opportunities for reversal.

"At present, the overall supply-demand relationship has not been particularly obvious improvement, the previous price rise is driven by the raw material side." In Meng Jingchun's view, although the price is still expected to rise slowly in the first half of the year, but considering that large factories have plans to expand production, the action force is slightly insufficient.

Liu Huifeng, chief researcher of black metal of Donghai futures, also reported that "up to now, there is no sign of large-scale production or expansion of electric furnaces of downstream steel enterprises."

When the above reality is reflected in the capital market, the price of Fangda carbon has stopped rising, and the stock price has fallen periodically since late March.

It seems that the secondary market is also waiting for the opportunity of some graphite electrode price rise.

 

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