Guojun Steel: Steel pipe demand may usher in an outbreak, giving the steel industry an "overweight" rating

my country is the main producer of steel pipes in the world. The downstream of steel pipes is mainly construction machinery and real estate, and the demand growth rate is relatively high. In 2019, my country's steel pipe output was 84.17 million tons, accounting for about 60% of the world's output. It is the world's major steel pipe producer. Steel pipes are mainly divided into seamless pipes and welded pipes according to the variety, of which welded pipes are the main variety, accounting for about 67%. The downstream of steel pipes is dominated by construction machinery and real estate, accounting for 15% and 12.22% respectively. From 2000 to 2020, the compound growth rate of the length of my country's water supply pipelines and gas pipelines is 7.12% and 17.53% respectively. The overall demand for the steel pipe industry has grown rapidly. Under the background of steady growth, the demand for steel pipes may grow rapidly. The Central Economic Work Conference in 2021 emphasized accelerating the renewal and renovation of aging urban pipelines, and the "Notice on Further Clarifying the Requirements for the Renovation of Old Urban Residential Areas" issued by the Ministry of Housing and Urban-Rural Development and other three ministries and commissions clearly identified old pipelines as a priority project for the renovation of old residential areas. , Guojun Iron and Steel expects that the urban aging pipeline will be renovated in a centralized manner. Assuming that gas pipelines that have served for more than 20 years need to be replaced, it is estimated that the total demand for gas pipelines in my country in 2022 will increase by about 50% compared with 21 years. The accelerated construction of oil and gas pipeline networks and urban pipeline corridors will drive up the demand for pipelines. According to the construction goals of the "Mid- and Long-Term Oil and Gas Pipeline Network Planning", Guojun Iron and Steel estimates that the average annual growth rates of crude oil pipelines, refined oil pipelines, and natural gas pipeline network mileage in 2021-25 will be 4.99%, 6.64%, and 13.64%, respectively; , we observed that the year-on-year growth rate of the length of urban pipe corridors in my country in 2019 increased by 10.08 percentage points compared with 2018, and the construction of urban underground pipe corridors in my country has accelerated significantly. It is expected that the construction of my country's oil and gas pipeline network and urban pipe gallery will accelerate in the future, and the corresponding pipeline demand will increase rapidly.