Monthly Summary: The trend of the bearing steel market prices may strengthen slightly after the bottom of the shock in July

Monthly Summary: The trend of the bearing steel market prices may strengthen slightly after the bottom of the shock in July

Overview: From January to May 2022, domestic crude bearing steel output increased by 2.05% year-on-year, and bearing steel output increased by 4.78% year-on-year. Looking back at the bearing steel market in June, the overall market price showed a weak downward trend, falling to a new low level during the year. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 6154 yuan/ton, down 216 yuan/ton from the end of May, and the month-on-month decrease is 3.51%. After the epidemic was gradually brought under control at the beginning of the month, the overall market demand has not improved significantly, the pessimism of merchants has increased, and the spot price has fallen rapidly. In July, the national bearing steel production enterprises did not significantly stop production and reduce production, the pressure on the supply side still exists, and the market is affected by the rainy season and high temperature weather, the demand may still be difficult to improve significantly.

1. Domestic production of bearing steel

(1) Production of bearing steel from January to May 2022: crude steel and steel both increased year-on-year

According to statistics from the Special Steel Association, from January to May 2022, my country's major high-quality special steel enterprises produced 2.0763 million tons of crude bearing steel, an increase of 2.05% compared with the same period last year; from January to May 2022, my country's main high-quality special steel The company's output of bearing steel was 1.8355 million tons, an increase of 4.78% compared with the same period last year.

(2) The output of finished products of bearing steel production enterprises from January to May 2022: the output of steel mills increased year-on-year

It can be seen that at present, the largest bearing steel production enterprises are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Steel), Shagang (Northeast Special Steel, Yonggang) and Jiyuan Steel, accounted for 59% of the total output. From January to May 2022, the overall output of bearing steel is increasing, and the output of steel mills such as Shigang, Laigang, Jianlong, Jiyuan, and Zhongte have increased compared with the same period last year. The output of Xining, Beiman, Bent, Zhongtian, Nangang, Juneng and other steel mills decreased.

2.The domestic bearing steel market performance

In June, the market price of bearing steel fell sharply as a whole, and the supply and demand were seriously unbalanced. In June, with the sharp drop in the futures market, the price of raw materials fell from a high level, the cost support was weakened, the spot market sentiment was poor, and prices began to fall chaotically. With the release of favorable policies at the end of the month, the market mentality has been restored, and the spot price rebounded slightly, but due to the lack of continuous demand, the price increase was slightly weak. Recently, international prices have continued to weaken. After exports have decreased, domestic supply pressure may increase again. Entering July, the national bearing steel production enterprises did not significantly stop production and reduce production, the pressure on the supply side was still there, while the performance on the demand side was flat, and the contradiction between supply and demand still existed. In view of the fact that the recent factory warehouse and social warehouse are at a high level compared with previous years, under the pressure of the market to remove the warehouse, it is expected that the bearing steel market may run at a low level in July.

3. Relevant market information

(1) Raw material price:

The price of iron ore dropped sharply in June, and the signal of weaker demand strengthened. The current Mysteel 62% Australian Powder Index is US$119.1/dry ton. From the demand side, due to poor demand for finished products and profits still in a state of loss, steel mills mostly maintain a state of replenishing inventories on demand, cautious inquiries, and deserted market transactions; the domestic scrap steel market has fallen sharply, and pessimism has spread in the market, and the average price at the end of the month At 2863 yuan / ton. With the reduction of billet prices, the profit margins of steel mills have been continuously compressed, and scrap prices have been under pressure. With the price of steel tenders falling, the chromium series market will maintain a game situation in the short term. If the chrome ore holders resolutely support the price, the downstream iron plants may reduce production in a large area due to the high cost. In the near future, it is still necessary to pay attention to the output of downstream iron plants, and changes in demand will put pressure on the chrome ore market, and be alert to the possibility of continuing to put pressure on ore prices.

(2) Downstream industries

According to the statistics and analysis of the China Association of Automobile Manufacturers, in May 2022, the production and sales of automobiles will be 1.926 million and 1.862 million respectively, a month-on-month increase of 59.7% and 57.6%, respectively, a year-on-year decrease of 5.7% and 12.6%. From January to May, production and sales reached 9.618 million and 9.555 million respectively, down 9.6% and 12.2% year-on-year. With the full resumption of work and production in the automobile industry chain, the automobile market is showing a trend of accelerated recovery, and the production and sales of new energy vehicles have grown rapidly, with both production and sales increasing by 1.1 times year-on-year.

4. Conclusion

In June, the overall market price of bearing steel showed a weak downward trend, and the overall market sentiment was pessimistic. In the recent stage, the overall market inventory is in a situation of continuous accumulation. The inventory pressure of bearing steel pipe factories and forging factories has increased. Market merchants have mainly digested the previous inventory, and their willingness to order in the short term is low. At present, the price difference between the price of GCr15 and 45# carbon steel has expanded, and the price difference of some steel mills has reached 700-900 yuan / ton, and the downstream anxiety still exists. It is learned from major domestic steel mills that the current orders received by steel mills in July are still lower than expected, and market traders are in a situation of upside down, and the settlement price deviates from the spot market price. Under the reality that the current macro environment continues to improve, the market's pessimistic expectations have been gradually restored, but returning to the industrial perspective, the downstream demand for bearing steel has not seen a significant increase, and the pressure of steel pipe factories and forging factories to collect payments continues to increase. It is expected that the price of domestic bearing steel in July will consolidate at a low level, and there is a lack of upward momentum for the time being.