China's nuclear power construction has entered an outbreak

Following the listing of China Guangdong Nuclear Power Corp. in Hong Kong last year, China Nuclear Power Corporation, the second company to produce nuclear power for its main business, will soon enter the capital market. According to the analysis, companies competing to go public for the capital market are a microcosm of the outbreak of China's nuclear power construction. With the rapid expansion of China's nuclear power, the market related to nuclear power construction will also be detonated.

Hundreds of billions of market opportunities in the next five years

Since the occurrence of severe haze weather in China, all kinds of new energy and clean energy have become popular. Nuclear power has once again ushered in the spring of development as a more efficient power generation form. With the restart of China’s nuclear power construction, nuclear power construction has ushered in a climax. It is reported that China’s nuclear power is under construction in the world’s largest scale. According to the "Energy Development Strategic Action Plan (2014-2020)" issued by the General Office of the State Council, by 2020 China's nuclear power generating units will reach 58 million kilowatts and 30 million kilowatts under construction.

According to Zhang Huazhu, chairman of the China Nuclear Energy Industry Association, 2015 is the year of the Twelfth Five-Year Plan. It is expected that 6 to 8 units will start construction during the year, and 8 nuclear power units will be put into commercial operation and will become inputs. The year in which a commercial nuclear power unit is operated for the most is a critical year for the restart of nuclear power. According to the plan, in the next five years, China will need to start construction of 40 nuclear power units, which will require at least 600 billion yuan.

It is reported that both CNNC and CGN's asset-liability ratio have approached 75% of the red line of asset supervision of central enterprises, and huge capital demand has forced major nuclear power companies to accelerate their entry into the capital market. Last year, China Guangdong Nuclear Power was successfully listed in Hong Kong. On June 2 this year, China Nuclear Power officially launched its IPO trip on the Shanghai Stock Exchange. According to media reports, China's nuclear construction is also sprinting the IPO.

Zhuo Chuang analyst Wang Ning believes that listing is an important means of financing the company and it is expected that China’s nuclear power will expand rapidly. "And with the acceleration of the nuclear power industry, related industries will also usher in rapid development."

It is understood that nuclear power equipment investment in nuclear power plant investment in fixed assets accounted for about 50%, is the nuclear power investment the most important part. Nuclear power equipment includes nuclear islands, conventional islands and auxiliary equipment, which account for 23%, 15% and 12% of the total power plant investment. If calculated according to the cost of 12,000 yuan/kw, the total cost of a set of 1 million kilowatt nuclear power units is 12 billion yuan. According to the above-mentioned ratio, the nuclear island investment is 2.76 billion yuan, the conventional island investment is 1.8 billion yuan, and the auxiliary equipment is 1.44 billion yuan.

With the restart of nuclear power investment, sub-sectors such as nuclear power castings and forgings, nuclear power equipment, nuclear valves, and nuclear power HVAC equipment are expected to fully recover. In addition to this, during the operational period after the completion of nuclear power, major repairs and daily maintenance of equipment will require various services, such as the replacement of certain auxiliary equipment, the provision of inspection items, and consumables. In addition, nuclear power plants have a long operating cycle, so they will have a lasting impact on the market.

Nuclear power steel will usher in explosive growth

The nuclear power equipment industry chain can be divided into upstream raw material suppliers, midstream nuclear power equipment manufacturers, and downstream nuclear power plant operators. The raw material for upstream nuclear power equipment is mainly steel.

According to Wang Ning, a large number of high-end steel materials are needed in the construction of nuclear power. This is undoubtedly a major advantage for the steel industry, which is still in the cold winter.

It is understood that the current production of steel for nuclear power is very difficult and is close to the limit level of advanced rolling mills at home and abroad. Therefore, China’s steel for nuclear power was once heavily dependent on imports. At present, China's nuclear power steel has been able to achieve 85% of domestic production. With the success of Hualong No.1, the National Energy Administration required the localization rate of key equipment such as steam generators and nuclear tubes to exceed 85%, and China’s nuclear power steel industry has ushered in a feast in the market.

It is reported that in addition to high-end stainless steel, high-temperature alloys and other steel used in the nuclear power plant itself, a large number of steel bars are used in the nuclear power plant's workshops, office areas, and the placement of FCDs. Among them, the pouring of FCD is extremely demanding on reinforcing steel bars. It requires high strength and good plasticity, stable performance, and no rust, no oil, corrosion, shock, and the surface without any visible cracks.

"In terms of market demand, the annual demand for seven nuclear power generation units corresponds to the number of tons of steel used for nuclear power generation. Typical products such as high-temperature alloys are about 10,000 tons per year, and high-end stainless steel is close to 50,000 tons," said Wang Ning. With the continuous deepening of the construction of the Belt and Road, it is expected that nuclear power exports will continue to make breakthroughs, and steel for nuclear power will usher in a larger market space. “The most optimistic projection is that there are about 980 potential export spaces for nuclear power plants in the next 15 years, which is much larger than the market space of about 100 in China. About 80% of the new nuclear power generating units will be concentrated along the one belt and one road.”

However, Wang Ning also said that since nuclear power steels currently account for only a small proportion of the entire steel industry's consumption, the main steel used is high-end steel, so the impact on the entire steel industry in the cold winter is probably not obvious.