Monthly Summary: The Market Price of Bearing Steel Will Rise Slightly in April

Monthly Summary: The Market Price of Bearing Steel Will Rise Slightly in April

Overview: From January to February 2023, the domestic production of bearing steel crude steel decreased by 27.74% year-on-year, and the output of bearing steel decreased by 3.70% year-on-year. Looking back at the bearing steel market in March, the overall situation showed a trend of consolidation and strengthening, the pressure on the supply side was high and the demand was insufficient, and the overall situation was still in a state of "strong expectations, weak reality". Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 5,478 yuan/ton, which is 5 yuan/ton higher than that at the end of February, and the month-on-month increase is 0.09%. It is expected that the market price of bearing steel may rebound in April, but the space is limited.

1. Domestic Production of Bearing Steel

(1) Bearing steel production in January-February 2023: both steel and crude steel decreased year-on-year

From January to February 2023, the output of bearing steel crude steel of my country's major high-quality special steel enterprises is 784,200 tons, a decrease of 27.74% compared with the same period last year; , a decrease of 3.70% compared with the same period last year.

(2) The output of finished products of bearing steel manufacturers from January to February 2023: the output of steel mills decreased year-on-year

At present, the production enterprises with large bearing steel production are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Shigang and Shagang (Northeast Special Steel, Yonggang), accounting for 63% of the total output . From January to February 2023, the overall output of bearing steel is decreasing. The output of steel plants such as Shigang, Jiyuan, and Juneng has increased slightly compared with the same period last year. Steel plants production has decreased such as Xining, Xinggang, Bente, Shagang, Zhongtian, and Nangang.

2. Domestic Bearing Steel Market Performance

In March, the market price of bearing steel rose slightly, and the recovery of demand was less than expected. According to feedback from some merchants, the export of bearing steel continues to be under pressure this year, due to the cooling demand in Europe and the United States. At present, the cost of raw materials is still high, the profits of steel mills are shrinking, and the willingness to raise prices is relatively strong. Although the release of downstream demand is not as ideal as expected, it is still recovering slowly. It is expected that the market price of bearing steel will fluctuate strongly in April.

3. Relevant Market Information

(1) Raw material prices:

In March, the price of iron ore fluctuated upwards, and the current 62% Australian powder index is 127.8 US dollars/dry ton. Under the expectation of demand growth, iron ore prices still have room to rebound, but the demand growth driven by the current economic recovery has not greatly improved the profits of steel mills, and the risk of steel production restrictions should always be vigilant; the domestic scrap steel market is rising slightly Then it began to weaken, and the average price at the end of the month was 2,725 yuan/ton. At present, the social inventory of scrap steel continues to be transferred to steel mills, which leads to the continuous recovery of steel mill inventory. It is expected that the domestic scrap steel market price will enter a weak and volatile downward state again after a slight increase in April. The market price of high-carbon ferrochrome fluctuated at a low level, and the price at the end of the month was 9011 yuan/ton. Domestic ferrochrome production capacity has increased rapidly, downstream consumption has been sluggish and demand has been greatly reduced, and under the mismatch of supply and demand, steel prices have dropped sharply. It is expected that the chrome market will run weakly in April.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in February 2023, the production and sales of automobiles will be 2.032 million and 1.976 million, respectively, an increase of 27.5% and 19.8% month-on-month, and an increase of 11.9% and 13.5% year-on-year. From January to February 2023, the production and sales of automobiles will be 3.626 million and 3.625 million respectively, a year-on-year decrease of 14.6% and 15.2% respectively. Since the same period last year and January this year were both Spring Festival months, the base was relatively low, and the production and sales of automobiles in February showed significant growth both month-on-month and year-on-year.

4. Conclusion

In March, the market price of bearing steel rose partially, and the actual market demand remained weak. Although the supply side of bearing steel is relatively stable in April and there is no obvious increase plan, the overall demand side is expected to be weak, and the market will still have pressure to destock. Signs of a sharp recovery in demand in April are still unclear, and the contradiction between supply and demand still exists. However, in view of the cost of raw materials, the price has been clearly supported. It is expected that the market price of bearing steel may rise in the later period, but the upside is limited.