Monthly data: The Bearing Steel Market still has an upward momentum in October

Monthly data: The Bearing Steel Market still has an upward momentum in October

 Overview: From January to August, the output of domestic crude steel bearing steel increased by 30.85% year-on-year, and the output of bearing steel increased 27.03% year-on-year. Looking back at the bearing steel market in September, under the influence of the "dual control of energy consumption" policy and multiple factors, the price showed an overall upward trend. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 6798 yuan/ton, an increase of 262 yuan/ton from the end of August, a 4.01% month-on-month increase. Although the current automotive industry and construction machinery production and sales have declined, and demand performance has fallen short of expectations, in view of the recent decline in resource supply, it is expected that the bearing steel market price may still rise in October.

1. Domestic production of bearing steel

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

According to statistics from the Special Steel Association, my country’s main high-quality special steel enterprises produced 3,181,200 tons of crude steel bearing steel from January to August 2021, an increase of 30.85% compared to the same period last year; from January to August 2021, my country’s main high-quality special steels The company's bearing steel output was 2.761 million tons, an increase of 27.03% compared with the same period last year, as shown in Figure 1.

(2) Production of finished materials from bearing steel production enterprises from January to August 2021: output of steel mills increased year-on-year

As can be seen from Figure 2, the current larger production enterprises of bearing steel are: CITIC Special Steel (Xingcheng Steel, Daye Special Steel, Qingdao Steel), Zhongtian and Bensteel, accounting for 59% of the total output. From January to August 2021, the overall output of bearing steel is increasing, with the output of steel mills such as Beiman, Shagang, Yangang, Jiyuan, Nangang, Xining, Zhongt, Jueng and so on increasing compared with the same period last year, and only the output of steel mills such as Jianlong, Bengang, Zhongtian and Shigang decreased slightly.

2. The performance of the domestic bearing steel market

The price of bearing steel market fluctuated strongly in September, and the demand was average. From the perspective of supply, in September, the annual maintenance of some steel plants and some areas were affected by the "power curtailment" policy, and the supply declined. Although the release of effective demand from downstream terminals is modest, market prices have been able to rise due to the continuous promotion of steel mills. However, in view of the unsatisfactory performance of the current steel pipe mills and forging plants, there is insufficient motivation for the subsequent sharp rise in the price of bearing steel. With the arrival of high-cost resources in the market, it is expected that the bearing steel market will be supported or continue to look for upward momentum in October.

3. Relevant market information

(1) Raw material price:

Iron ore prices accelerated in September and rebounded slightly at the end of the month under the support of steel mills' holiday replenishment. The Mysteel 62% Australian powder index is now US$116.45/dry ton. In September, the fundamentals of iron ore showed a pattern of both supply and demand. Global iron ore shipments increased significantly from the previous month following the completion of overhaul in Australia. The average daily shipment reached the highest level this year. However, the arrival of iron ore from China in September was affected by the weather. The month-on-month decline was significant. It is expected that iron ore will continue to supply oversupply in October, but is subject to a limited drop in freight rates; domestic scrap prices are fluctuating, and overall supply and demand are weak. The average price at the end of the month is 3340 yuan/ton. In October, after the National Day holiday, steel mills may have a demand for scrap replenishment. However, considering that the impact of production and electricity curtailment policies continues, scrap demand may continue to decline, and scrap prices may show a weak consolidation. Trend: The high-carbon ferrochrome market has risen sharply, and the supply-side production is still limited, with the price at 10733 yuan/ton at the end of the month. At present, the national energy consumption policy and power curtailment situation are becoming stricter. The lack of coal resources at the superimposed cost side has led to severe power problems. The trend of general increase in electricity prices and the support of coke prices are expected to continue to stabilize the price of ferrochromium.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in August 2021, the production and sales of automobiles were 1.725 million and 1.799 million, a year-on-year decrease of 18.7% and 17.8% respectively. From January to August, the production and sales of automobiles were 16.166 million and 16.556 million respectively, an increase of 11.9% and 13.7% year-on-year. Affected by factors such as the epidemic, the shortage of automotive chip supply, and the full implementation of the National Sixth Emission Standard (commercial vehicles), my country's automobile production and sales continued to decline year-on-year, but the sales of new energy vehicles continued to maintain rapid growth, with a market penetration rate approaching 11% from January to August .

5. Conclusion

In September, the market price of bearing steel showed an overall upward trend, with most steel mills rising at 150-300 yuan/ton. With the increase in production and power restrictions, the supply of bearing steel is expected to continue to decrease in October, and the short-term inventory in the factory will not increase significantly, and the market circulation resources are relatively tight. It is expected that the bearing steel market will still have upward momentum in October, especially for high-end materials.