Monthly Summary: The market price of bearing steel may be adjusted within a narrow range in September

Monthly Summary: The market price of bearing steel may be adjusted within a narrow range in September

Overview: From January to June 2023, the domestic production of bearing steel crude steel decreased by 3.37% year-on-year, and the output of bearing steel decreased by 5.70% year-on-year. Looking back at the market in July, with the introduction of the level control policy and the rise in raw material prices, the domestic bearing steel market price has gradually stabilized and rebounded, and the market sentiment has improved significantly. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 5,046 yuan/ton, a decrease of 25 yuan/ton from the beginning of the month, and a month-on-month decrease of 0.49%. At present, the cost support is obvious. At the same time, the macro policy in August is expected to be further released. However, since August is still the traditional off-season for consumption, it is difficult to improve the demand significantly in the short term. It is expected that the price rise of the bearing steel market in August will not be resilient enough.

1. Domestic production of bearing steel

1.1. Bearing steel output from January to June 2023: steel and crude steel both decreased year-on-year

According to statistics from the Special Steel Association, from January to June 2023, the crude steel output of my country's major high-quality special steel enterprises was 2.409 million tons, a decrease of 3.37% compared with the same period last year; The output of bearing steel products of the enterprise was 2.0665 million tons, a decrease of 5.70% compared with the same period last year.

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

At present, the production enterprises with large output of bearing steel are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Jiyuan Iron and Steel and Shigang, accounting for 58% of the total output. From January to June 2023, the overall output of bearing steel is decreasing. The output of Juneng, Jiyuan, Zhongtian, Xinggang and other steel mills increased slightly compared with the same period last year. The output of steel mills such as Beiman, Yonggang, Zhongte, Dongte, Shigang, Nangang, and Benxi Steel all decreased.

2.1. Domestic bearing steel market performance

In July, the bearing steel market was low before and then high, and the market sentiment improved significantly. In August, there were many typhoons and rainy weather, which may have a certain degree of impact on demand. In addition, the funding problem is difficult to solve in the short term. However, the market still has high expectations for macro policies, coupled with relatively firm prices of raw materials in the near future. It is expected that the market price of bearing steel in August may be adjusted within a narrow range.

3. Relevant market information

3.1. Raw material price

In July, the price of iron ore surged and then fell back. The current 62% Australian powder index is 109.6 US dollars/dry ton. It is expected that the price trend of iron ore will be under greater downward pressure in August, and the overall price is expected to rise and then fall. The market price of scrap steel is mainly rising, and the supply and demand are weakening simultaneously. The average price of scrap steel is 2,562 yuan/ton. It is expected that scrap steel is more likely to fluctuate at a high level in August; the market price of high-carbon ferrochrome is relatively stable, and the price at the end of the month is 8,711 yuan/ton. It is expected that ferrochrome will run strongly and stably in the short term.

3.2. Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in June 2023, my country's automobile production and sales will complete 2.561 million and 2.622 million vehicles, a year-on-year increase of 2.5% and 4.8% respectively. Among them, the production and sales of new energy vehicles were 784,000 and 806,000 respectively, a year-on-year increase of 32.8% and 35.2% respectively. In the first half of the year, the production and sales of automobiles were 13.248 million and 13.239 million respectively, a year-on-year increase of 9.3% and 9.8% respectively. Since April, under the influence of the low base in the same period and multiple favorable factors, the automobile market has continued to improve, production and sales have continued to grow, and the cumulative growth in the first half of the year has been relatively high.

4. Conclusion

In July, the market price of bearing steel stabilized and rebounded, and the market sentiment improved significantly. The contradiction between current expectations and reality is still in the game. Considering that there are more high-temperature weather in August, and the funding situation of terminal enterprises is still tight, the release of demand may be limited. It is expected that the bearing steel market may adjust within a narrow range in August.