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

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

Overview: From January to February, the output of domestic crude steel bearing steel increased by 25.21% year-on-year, and the output of bearing steel increased 23.24% year-on-year. Looking back at the bearing steel market in March, the terminal demand was clearly released, and the domestic bearing steel market prices showed an upward trend. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 6,100 yuan/ton, an increase of 93 yuan/ton from the end of February, a month-on-month increase of 1.55%. In the recent stage, most of the bearing steel production enterprises have received more orders. The domestic downstream industries such as automobile bearings, metallurgical bearings, and engineering machinery bearings have seen good overall transactions, and the business mentality is relatively optimistic. Although the output of bearing steel continues to increase in terms of capacity release from steel mills, due to acceptable demand and cost-driven, the cost of new arrivals in the market is currently high. It is expected that the bearing steel market will continue to strengthen in April.

1. Domestic production of bearing steel

(1) Bearing steel output from January to February 2021: Crude steel and steel both increased year-on-year

According to the statistics of the Special Steel Association, the output of crude steel bearing steel in my country's main premium special steel enterprises from January to February 2021 was 812,600 tons, an increase of 25.21% compared with the same period last year; from January to February 2021, my country's main premium special steel The company's bearing steel output was 696,300 tons, an increase of 23.84% 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 February 2021: 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 58% of the total output. From January to February of 2021, the overall output of bearing steel increased. The output of Beiman, Nangang, Shagang, Juneng, CITIC Special Steel, Jianlong, Jiyuan, Zhongtian and other steel plants increased compared with the same period last year. Steel, Benxi Steel, Xining, Shigang and other steel mills have slightly reduced their output.

2. The performance of the domestic bearing steel market

The domestic market price of bearing steel rose slightly in March, and the demand was fair. Affected by the continuous promotion of steel mills, market prices have been able to rise. At present, most manufacturers are still optimistic about the market in April and May. However, on the demand side, due to the current market prices rising too fast, the profits of end customers have been severely compressed, and in the short term, on-demand procurement is the main focus. With the increase in raw material prices and the overall environmental impact of the steel market, steel mills will continue to increase their ex-factory prices in the future. It is expected that the bearing steel market prices will continue to strengthen in April.

3. Relevant market information

(1) Raw material price:

The iron ore market price fluctuated at a high level in March, and the forward spot price of iron ore at the end of the month was US$164.25/dry ton. At present, downstream demand is in the high volume range. Superimposed steel mills' gross profit per ton of steel continues to expand, and iron ore prices are unlikely to fall sharply. The general carbon scrap market is consolidating strongly, and the market fluctuates. The monthly average price is 2,924 yuan/ton. On the whole, the scrap steel market is expected to fluctuate and rise in April; the price of the high-carbon ferrochrome market will be adjusted weakly, and the price at the end of the month will be 8622 yuan/ton. In Inner Mongolia, the power limit was announced in April, and later policies may limit the output of high-carbon ferrochromium in Inner Mongolia at 220,000 to 250,000 tons. High profits stimulated the explosion of new production in other regions, superimposing southern China into a period of high water. The supply gap of ferrochrome will be gradually repaired, and the price of high-carbon ferrochrome is expected to continue to weaken in the later period.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in February 2021, the month-on-month ratio of automobile production and sales will still show a certain decline, but the year-on-year impact of the low base in the same period continues to show rapid growth. In February, automobile production and sales reached 1.503 million and 1.455 million, respectively, a decrease of 37.1% and 41.9% from the previous month, and a year-on-year increase of 4.2 times and 3.6 times. From January to February, the production and sales of automobiles were 3.89 million and 3.958 million, an increase of 88.9% and 76.2% year-on-year.

4. Conclusion

The market price of bearing steel strengthened slightly in March, the peak season of market demand is approaching, and market transactions performed well. From the perspective of supply, the capacity utilization rate of steel mills has remained high, and the supply pressure in the later period will be relatively high. From the demand side, the current market price has risen too fast, and the profits of end customers have been severely compressed. In the short term, it is mainly based on on-demand procurement, and the release of demand in the later period may not be as strong as the previous period. It is expected that the bearing steel market in April may continue to find momentum for support.