Monthly Summary:Bearing Steel Market Prices may Fluctuate in a Range in October

Monthly Summary:Bearing Steel Market Prices may Fluctuate in a Range in October

Overview: From January to August 2023, domestic crude bearing steel production increased by 3.75% year-on-year, while bearing steel production decreased by 0.21% year-on-year. Looking back at the market situation in September, market prices were stable and strong, the raw material market fluctuated at a high level, finished product output increased year-on-year, market sentiment was relatively cautious, and transaction performance was average. As of now, the average domestic price of 50mm bearing steel (continuous casting) is 5,050.5 yuan/ton, an increase of 5 yuan/ton from the beginning of the month. Overall, it is difficult to see significant improvement on the demand side in the short term. However, with the advancement of my country’s key production process technologies, key product quality technologies, and key intelligent manufacturing technologies, the pace of improvement in the quality of special steel products and the development of high-end products will enter a rapid phase. In this period, it will drive the market development of bearing steel. It is expected that the market price of bearing steel in October may fluctuate in a range.

1. Domestic bearing steel production situation

1. Bearing steel output from January to August 2023: year-on-year growth in crude steel and steel mills

Data from the National Bureau of Statistics show that in August 2023, the country's crude steel output was 86.41 million tons, a year-on-year increase of 3.2%. From January to August 2023, the country's crude steel output was 712.93 million tons, a year-on-year increase of 2.6%. According to statistics from the Special Steel Association, the crude steel output of bearing steel by my country's major high-quality special steel companies from January to August 2023 was 3.162 million tons, an increase of 4.9% compared with the same period last year; from January to August 2023, my country's major high-quality special steel production The company's bearing steel output was 2.7638 million tons, an increase of 1.56% compared with the same period last year.

. The output of finished products by bearing steel manufacturers from January to August 2023: the total output of steel plants increased slightly

At present, the manufacturers with the largest output of bearing steel are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Special Steel), Jiyuan Steel and Shigang, accounting for 58% of the total output. The overall output of bearing steel increased from January to August 2023. The output of steel plants such as Juneng, Jiyuan, Zhongtian, and Shigang increased slightly compared with the same period last year. CITIC Special Steel, Dongte Co., Ltd., Jianlong Beiman, Bengang, The output of Xining Special Steel and other steel plants has declined.

2. Performance of domestic bearing steel market

In September, the bearing steel market price was stable and strong. The "Golden September" forecast failed to be realized as scheduled, and the market demand release was not as expected. The current raw material prices fluctuated at high levels, and the steel mills were almost on the edge of profit and loss. Business operations were still based on shipments. The main focus is on funds, and the mentality is cautious and wait-and-see. Downstream stocks are replenished on dips, and sales pressure still exists. Taken together, it is expected that the market price of bearing steel in October will be mainly stable and fluctuate in a range.

3. Relevant market information

1. Raw material price

As of September 19, the average forward spot price index for 62% Australian powder in September was US$120.53/dry ton, an increase of US$11.57/dry ton from August. It is expected that the final average price of the 62% index in September and October will be around US$120 and US$115 respectively. Judging from the decline in finished product output and the increase in surface demand in September, the destocking of total finished product inventory was mainly due to the recovery of Jinjiu demand, while the reduction in finished product production amplified the extent of destocking. As far as October is concerned, the supply of iron ore has increased, the demand has declined, and the price of iron ore has been under downward pressure. The negative impact on the ore price may be greater than the positive impact on the macro level. It is expected that the short-term iron ore price will maintain a weak and volatile operation; as of September On the 25th, the spot price of high-carbon ferrochrome showed a downward trend. The spot price of some non-mainstream varieties of chromium ore increased by 1-2 yuan/ton, and the price of coke grains increased by 100 yuan/ton. The national freight and electricity costs remained stable, with high The spot smelting cost of carbon ferrochrome production increased by 2-68 yuan/50 basis tons. At present, the total cost of ferrochrome is running on the high side, and the profit margins of individual factories are still squeezed. It is expected that the cost of high-carbon ferrochrome will run smoothly in the near future.

2. Downstream industries

Data from the National Bureau of Statistics show that in August 2023, automobile production and sales completed 2.575 million units and 2.582 million units respectively, an increase of 7.2% and 8.2% month-on-month, and a year-on-year increase of 7.5% and 8.4% respectively. From January to August 2023, automobile production and sales completed 18.225 million units and 18.21 million units respectively, a year-on-year increase of 7.4% and 8% respectively. According to historical data, driven by factors such as national consumption promotion policies and preferential promotions by car companies, the demand for car purchases continues to be released. The overall automobile market shows the characteristics of not being weak in the off-season, with both month-on-month and year-on-year growth.

4. Summary

Bearing steel inventories were high in the third quarter, the demand for "Golden Nine" was still lower than expected, and the short-term contradiction between supply and demand is still prominent. At present, factory warehouses and social warehouses continue to focus on destocking, and downstream procurement is more cautious. Spot demand has declined significantly, and terminals are less willing to restock. The market destocking speed has slowed down, and it is relatively difficult to improve overall demand in the short term. However, with the introduction and implementation of relevant favorable policies, some businesses have positive expectations for the market, and it is expected that the bearing steel market in October may fluctuate in a range.