Monthly data: The upward trend of the bearing steel market will continue to rise in December

Monthly data: The upward trend of the bearing steel market will continue to rise in December

Overview: From January to October, the domestic crude steel production of bearing steel increased by 6.83% year-on-year, and the production of bearing steel increased by 5.76% year-on-year. Looking back at the bearing steel market in November, the fundamentals have improved, the market as a whole shows an upward trend, and demand continues to improve. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 5113 yuan/ton, an increase of 150 yuan/ton from the end of October, and a month-on-month increase of 3.02%. The recent recovery of export orders has driven market demand to a certain extent, and the overall transactions in downstream industries such as domestic wind power bearings, metallurgical bearings, and engineering machinery bearings are improving. At present, most of the bearing steel production enterprises are relatively saturated, and the bearing steel market is expected to continue to rise in December.

1. Domestic production of bearing steel

(1) January-October output: crude bearing steel and steel both increased year-on-year

According to statistics from the Special Steel Association, from January to October 2020, my country’s main premium special steel enterprises produced 3,154,100 tons of crude steel bearing steel, an increase of 6.83% compared to the same period last year; from January to October 2020, my country’s main premium special steels The company's bearing steel output was 2,814,300 tons, an increase of 5.76% compared with the same period last year, as shown in Figure 1.

(2) The output of finished products of bearing steel production enterprises from January to October: the output of steel mills increased year-on-year

It can be seen from Figure 2 that the current largest output of bearing steel are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Zhongtian and Benxi Steel, which account for 61% of the total output. The overall output of bearing steel increased from January to October 2020. The output of Beiman, Benxi Iron and Steel, Shagang, Jiyuan, Juneng, and CITIC Special Steel all increased compared with the same period last year. Xinggang, Qilu, Laiwu Steel, The output of Xining, Shigang and other steel plants decreased slightly.

2. Performance of the domestic bearing steel market

In November, the bearing steel market showed a fluctuating upward trend, and the transaction was fair. Judging from the feedback from major steel mills, the recent direct supply order ratio is indeed good, the demand has always been strong, and foreign demand has also increased. The production and orders of various steel mills are also gradually improving, but the cumulative increase in market prices in recent stages has been relatively high. It is difficult for some downstream customers of bearings to digest the market, and high-priced transactions are more difficult. At present, the prices of raw materials such as iron ore and scrap steel have risen, and the cost of production enterprises will continue to remain high. It is expected that the bearing steel market will continue to rise in December.

3. Relevant market information

(1) Raw material price:

In November, the supply-demand gap of iron ore tightened and the price rose. At the end of the month, the Mysteel iron ore forward spot price index was 132.1 yuan/ton, up 14.2 yuan/ton from the beginning of the month. The global iron ore shipment volume has steadily increased slightly, and the arrival of the iron ore has decreased slightly. The demand will also weaken due to multiple disturbances. The imported ore market may fluctuate at a high level; the general carbon scrap market continues to record highs, with the average price at the end of the month 2535 yuan/ton. In the recent stage, the price gap between thread and scrap has widened, the profit of steel mills has increased significantly, and production has been more active. Entering December, many parts of the country have entered a cold winter, and demand for finished products will continue to decline. However, for scrap steel, scrap output will also decrease, resources are still tight, and iron ore and coke prices remain high. Scrap steel prices have also formed a certain degree of support; the market price of high-carbon ferrochrome has been adjusted weakly, and the price at the end of the month was 5972 yuan/ton. The purchase price of ferrochromium by mainstream steel mills has been lowered, the profits of alloy plants have been compressed, and the financial pressure of some traders is increasing towards the end of the year. It is expected that the price of chromium ore will still have a slight downward range.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in October 2020, although the effective working days of enterprises have been reduced due to the National Day and Mid-Autumn Festival holidays, the demand for the automobile market continues to grow rapidly, with both the month-on-month and year-on-year growth in production and sales. Among them, passenger cars perform better than commercial vehicles. In October, automobile production and sales reached 2.552 million and 2.573 million, respectively, representing a month-on-month increase of 0.9% and 0.1% and a year-on-year increase of 11.0% and 12.5%. From January to October, automobile production and sales were 19.519 million and 19.699 million vehicles, down 4.6% and 4.7% year-on-year. Compared with January-September, the rate of decrease was 2.1 percentage points and 2.2 percentage points respectively.

4. Conclusion

In November, the market price of bearing steel maintained an upward trend, and the demand for steel used downstream was relatively good. At present, most of the bearing steel manufacturers are receiving orders well, their production capacity is saturated and their delivery is delayed, and orders for downstream terminals, especially automobiles and home appliances, have increased significantly. The prices of raw materials such as iron ore and scrap steel have risen in recent stages, and the costs of production companies will continue to remain high. Although some traders said that prices are now more difficult to ship, the rate of increase is faster and larger. However, judging from the current shipment volume and delivery speed of major steel mills, the short-term market accumulation situation is not obvious, and with the increase in order costs, it is expected that the bearing steel market in December will continue to rise.