Monthly data: The trend of the bearing steel market will first rise and then fall in February

Overview: From January to December 2021, domestic crude bearing steel output increased by 18.95% year-on-year, and bearing steel output increased by 18.84% year-on-year. In January, the bearing steel market was generally stable, and the market supply and demand were weak. As of now, the average price of domestic bearing round steel 50mm (continuous casting) was 6,543 yuan/ton, an increase of 3 yuan/ton from the end of December, and a month-on-month increase of 0.05%. The price of winter storage this year is higher than in previous years, and the downstream terminals are not willing to actively store winter storage. Given the cost push and the overall positive market sentiment, it is expected that the post-holiday prices may have a good start, but the rate of increase and pace should not be too optimistic.

1. Domestic production of bearing steel

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

According to the statistics of the Special Steel Association, from January to December 2021, the crude bearing steel output of my country's major high-quality special steel enterprises was 4.7042 million tons, an increase of 18.95% compared with the same period last year; from January to December 2021, my country's main high-quality special steel The company's output of bearing steel was 4.1345 million tons, an increase of 18.84% compared with the same period last year, see Figure 1 for details.

Figure 1: 2021 National Bearing Steel Crude Steel, Steel Monthly Output

(2) The output of finished products of bearing steel production enterprises from January to December 2021: the output of steel mills increased year-on-year

As can be seen from Figure 2, the current bearing steel production enterprises are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Zhongtian and Benxi Steel, accounting for 60% of the total output . In 2021, the overall output of bearing steel will increase. The output of Jiyuan, Xinggang, Shigang, Beiman, Shagang, Xining, Nangang, Zhongte and other steel mills will increase compared with the same period last year. , Zhongtian and other steel mills output decreased.

Figure 2: The proportion of bearing steel production of major enterprises in total production from January to December 2021

2. The domestic bearing steel market performance

In January, the market price of bearing steel was generally stable, and the downstream demand gradually weakened. Since the price of winter storage this year is higher than in previous years, traders are not willing to take the initiative to store in winter, and the downstream purchases on demand. Before the holiday, traders mainly focus on returning funds from shipments, and they are not willing to raise prices. Although most traders are bullish on the post-holiday market, they are more cautious in operation. At present, the cost side has formed a strong support for steel prices. In addition, the market confidence in the heating season + Winter Olympics limited production has been restored. It is expected that the bearing steel market may usher in a wave of good start in February, but the rate and pace of increase cannot be too optimistic.

Table 1: Current ex-factory acceptance price of bearing steel mills

3. Relevant market information

(1) Raw material price:

Iron ore prices rose sharply in January, and the Mysteel 62% Australian Powder Index is now $146.1 per dry ton. Looking forward to February, the supply and demand of iron ore near-end fundamentals are weak, but the pattern of oversupply remains unchanged. At present, iron ore port stocks are relatively abundant in resources of mainstream varieties. Once the terminal demand starts slowly after the holiday or the steel mills cut production slightly more than expected, the possibility and magnitude of iron ore callbacks will increase significantly; domestic scrap steel fluctuates upward, and at the end of the month The average price is 3178 yuan / ton. Affected by the relatively strong steel prices and raw material prices, scrap prices are supported. At the same time, on the eve of the Spring Festival, steel mills are actively stockpiling scrap for winter, and the overall demand is good, and the performance of scrap prices is even stronger than that of steel. The price of scrap steel after the festival may have some support due to reasons such as replenishment, and the price is relatively strong. However, due to the high price of scrap steel, the production pressure of steel mills is relatively large, and the risk of falling back in the later period is relatively large. There may be some differentiation between regions, and attention should be paid to arcing. The resumption of work in furnace steel mills; the high-carbon ferrochromium market is running smoothly, and the price at the end of the month is 8,456 yuan / ton. Affected by the rise of mines and other raw materials, the cost of ferrochromium smelting has risen, and the reduction of ferrochromium production nationwide has been strengthened. The output of high-carbon ferrochromium in January was 593,800 tons, a decrease of 9.9% from the previous month. Some steel mills have been actively stocking up before the festival, and demand will continue to pick up after the festival. The fundamental repair may continue to boost the post-holiday chrome market.

Figure 3: Price changes of some raw materials since 2021

(2) Downstream industries

According to the statistics and analysis of the China Association of Automobile Manufacturers, in December 2021, the production and sales of automobiles reached 2.907 million and 2.786 million respectively, a month-on-month increase of 12.5% and 10.5% respectively. In 2021, my country's automobile production and sales will be 26.082 million and 26.275 million, up 3.4% and 3.8% year-on-year, respectively, ending the three-year downward trend. The sales of new energy vehicles completed 3.521 million units, a year-on-year increase of 1.6 times, ranking first in the world for seven consecutive years 

Figure 4: Monthly car sales and year-on-year changes since 2020

4. Conclusion

Since the price of winter storage this year is higher than in previous years, traders are not willing to take the initiative to store in winter, and there is little pressure on the market inventory in the later period. In the recent stage, the demand of downstream terminal enterprises such as automobile bearings, metallurgical bearings, and engineering machinery bearings has improved slightly, and the business mentality is better. In the case of the improvement of macro expectations, the market price is expected to push up further. However, given that the current market price of bearing steel is at a high level, and the price difference between the price of GCr15 and 45# carbon-bonded steel is large, the continued upward momentum in the later period is limited. It is expected that domestic bearing steel in February The price may move up and down.