Monthly data: The upward trend of the bearing steel market will fluctuate and weaken in January

Overview: From January to November, the domestic crude steel production of bearing steel increased by 19.94% year-on-year, and the output of bearing steel increased by 19.82% year-on-year. The overall performance of the bearing steel market in December fluctuated within a narrow range, and the supply and demand showed a slight rebound trend, but the degree of recovery was limited. As of now, the average price of domestic bearing round steel 50mm (continuous casting) is 6540 yuan / ton, up 17 yuan from the end of November / ton, a month-on-month increase of 2.61%. Near the end of the year, the market demand shows a seasonal weakening, and the willingness of the terminal to purchase and stock up is general. Manufacturing demand is still under certain pressure, and businesses are less motivated to operate winter storage. It is expected that the market price of bearing steel may fluctuate and weaken in January.

1. Domestic production of bearing steel

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

According to statistics from the Special Steel Association, from January to November 2021, China's major high-quality special steel enterprises produced 4.248 million tons of crude bearing steel, an increase of 19.94% compared with the same period last year. From January to November 2021, the output of bearing steel of China's major high-quality special steel enterprises was 3.7593 million tons, an increase of 19.82% compared with the same period last year. See Figure 1 for details.

（2） Output of finished products of bearing steel manufacturers from January to November 2021: the output of steel mills increased year-on-year

As can be seen from Figure 2, the current production enterprises with large output of bearing steel are CITIC special steel (Xingcheng Special Steel, Daye Special Steel and Qingdao Iron and steel), Zhongtian and Benxi Steel, accounting for 60% of the total output. From January to November 2021, the overall output of bearing steel is increasing, and the output of Jiyuan, Xinggang, Beiman, Shagang, Shigang, Xining, Nangang, medium and special steel mills is increasing compared with the same period last year. Only the output of steel mills such as Jianlong, Benxi Iron and steel, Zhongtian and Juneng decreased.

2. Domestic bearing steel market performance

In December, the market price of bearing steel fluctuated in a narrow range, and the downstream demand gradually weakened. In December, there was a rush period in some areas. Businesses with more resources continued to loosen their funds slightly in order to reduce the inventory, while businesses with less goods maintained consolidation. As the Spring Festival holiday approaches, many downstream terminals will have holidays in advance this year, and the market demand in January will be reduced in advance. In view of the limited supporting effect of the demand link on the price, the market price of bearing steel is expected to weaken in January.

3. Relevant market information

（1） Raw material price:

In December, the price of iron ore showed an upward trend. At present, the Mysteel 62% Australian flour index is USD 119.65/dry ton. Due to the rise of the external market at the beginning of the week, the mentality of domestic trade enterprises in pulling up the spot mode to correct the landing loss has been strengthened, forming the resonance of the internal and external market. With the superposition of the market's expectations for the resumption of blast furnace production and other factors, the market mentality is strong, and it is expected that the short-term trend of iron ore will still maintain a strong trend of shock; The domestic scrap market fell after rising, and the average price at the end of the month was 3102 yuan / ton. In January, as the year is approaching, the steel market is gradually closed and the demand continues to decline. It is expected that the scrap market will fluctuate in a narrow range and there may be some differentiation between regions; The high carbon ferrochrome market is weak, and the price is 8400 yuan / ton at the end of the month. On the supply side, due to the sufficient power in Inner Mongolia and the increase of new production capacity, the national supply remained high. With the weakening of the superimposed cost side support, the stronger the market profit selling sentiment, the lower the price. It is expected that in the short term, the market price of ferrochromium will have limited room to explore, or will remain at the current price.

(2) Downstream industry data

According to the statistics of the China Association of Automobile Manufacturers, in November 2021, the production and sales of automobiles will be 2.585 million and 2.522 million, respectively, with a month-on-month increase of 10.9% and 8.1%, respectively, a year-on-year decrease of 9.3% and 9.1%. From January to November, the production and sales of automobiles reached 23.172 million and 23.489 million respectively, a year-on-year increase of 3.5% and 4.5% respectively, and the growth rate continued to drop by 1.9 percentage points from January to October. Looking forward to December, with the stable and positive development of the macro economy, automobile consumption demand remains stable. However, there are still uncertainties on the supply side, and the problem of tight supply of chips still exists. Orderly electricity consumption in various places at the end of the year and scattered domestic epidemics have increased the potential risk of supply chain interruptions in the automotive industry. Influenced by the high base factor in the same period last year, the pressure to stabilize automobile production and sales is still relatively large.

4. Conclusion review

In December, the domestic bearing steel market prices were generally stable, and some materials fluctuated within a narrow range. In the recent stage, the price difference between GCr15 and 45# carbon steel is relatively large, and steel mills such as Zhongtian and Nangang have reached 650-770 yuan / ton. Judging from the current market research, the demand side of bearing steel has recovered to a certain extent in December, but it is difficult to change the expectation of weaker consumption in the general environment. In addition, December is at the end of the year, and some merchants are under great financial pressure. Manufacturers all intend to reduce capital risks and sales pressure by reducing supply or controlling inventory, and the operation is mainly to withdraw funds. In view of the slightly insufficient price support, it is expected that the market price of bearing steel may fluctuate and weaken in January, and the overall downside is limited.