Monthly data: The bearing steel market will continue to rise in March

  Monthly data: The bearing steel market will continue to rise in March

Overview: In February, the market prices of domestic bearing steel varieties showed a trend of volatility and strength, and steel mills' orders were acceptable. Up to now, the domestic average price of 50mm bearing round steel (continuous casting) is 6007 yuan/ton, an increase of 238 yuan/ton from the end of January, an increase of 4.12% month-on-month. It is expected that the market price of bearing steel still has room to strengthen in March.

1. Domestic production of bearing steel

(1) Bearing steel output in 2020: Crude steel and steel both increase year-on-year

According to statistics from the Special Steel Association, in 2020, my country's main high-quality special steel enterprises will produce 3,973,600 tons of crude steel bearing steel, an increase of 12.50% compared with the same period last year; in 2020, the output of my country's main high-quality special steel enterprises will be 3,494,100 tons , An increase of 8.89% compared with the same period last year, as shown in Figure 1.

(2) The output of finished products of bearing steel production enterprises in 2020: the output of steel mills increased year-on-year

It can be seen from Figure 2 that the current output of bearing steel is relatively large: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Zhongtian and Benxi Steel, accounting for 62% of the total output. The overall output of bearing steel will increase in 2020, and the output of steel plants in Beiman, Benxi Iron and Steel, Shagang, Nangang, Jianlong, Juneng, CITIC Special Steel, and Jiyuan have increased compared with the same period last year. Only Xinggang, Qilu, Xining, Shigang and other steel mills have slightly reduced their output.

2. The performance of the domestic bearing steel market

The average price of the domestic bearing steel market continued to rise in February, and the demand rebounded more than expected. It is expected that there is still room for the price of bearing steel to rise in March.

3. Relevant market information

(1) Raw material price:

The iron ore market price fluctuated upward in February. The forward spot price of iron ore at the end of the month was US$176.3/dry ton, an increase of US$11.5/dry ton from the beginning of the month, an increase of 7.0%. In February, on the basis of the relief of port pressure and the decline of port dredging, the total inventory of the port maintained a trend of accumulation, but the reality of the resumption of production of blast furnaces in steel plants, strong macro expectations, and early start of downstream demand is expected to be optimistic and a sharp increase. Driven by the prices of finished products, iron ore prices remained at a relatively high level in February as a whole. It is expected that the supply growth rate in March will be slower than the demand growth rate, and port inventory may stop increasing. The iron ore price will show a trend of falling first and then rising, with an average price slightly higher than that in February; the market price of general carbon scrap will increase to varying degrees. However, the entire market has not fully recovered, and the average price at the end of the month is 2880 yuan/ton. On the whole, the scrap steel market is expected to fluctuate and rise in March; the market price of high-carbon ferrochromium will increase slightly, and the price at the end of the month is 8961 yuan/ton. Within the week, Inner Mongolia announced that the monthly power budget for March will continue to decrease compared with February, and the supply of ferrochrome may continue to decline in March. The price of ferrochrome is expected to remain firm in the future.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in January 2021, the production and sales of automobiles were 2.388 million and 2.503 million, down 15.9% and 11.6% month-on-month, and up 34.6% and 29.5% year-on-year. There are two reasons for the sharp year-on-year increase in production and sales this month. First, the current market demand is still recovering. Second, the base level is low due to the 2020 Spring Festival holiday in January and the impact of the epidemic at the beginning of last year. From a month-on-month perspective, the rapid decline in production from the previous month reflects that the insufficient supply of automotive chips has affected the company's production rhythm.

4. Conclusion

Bearing steel market prices continued to strengthen in February, and the market was bullish. 2021 is the first year of the 14th Five-Year Plan, and the market is full of confidence. It is expected that there will still be room for demand to continue to rise in March, and with the help of costs, the market price of bearing steel in March will still have a certain upward space.