Monthly Summary:Bearing Steel Market Prices may fluctuate and strengthen in November

Monthly Summary:Bearing Steel Market Prices may fluctuate and strengthen in November

Overview: From January to September 2023, domestic crude bearing steel production increased by 4.25% year-on-year, and bearing steel production increased by 1.78% year-on-year. Looking back at the market situation in October, raw material prices are relatively high, but market demand is lower than expected. The domestic bearing steel market price range fluctuates, and the market sentiment is mainly wait-and-see. As of now, the average domestic price of 50mm bearing steel (continuous casting) is 5070.5 yuan/ton, an increase of 20 yuan/ton from the beginning of the month. According to the current market, it is difficult for the demand side to improve significantly in the short term. However, due to the impact of cost support and the planned maintenance of some steel mills, it is expected that the market price of bearing steel may fluctuate and strengthen in November.

1. Domestic bearing steel production situation

1. Bearing steel output from January to September 2023: both crude steel and steel products increased year-on-year

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 September 2023 was 3.506 million tons, an increase of 4.25% compared with the same period last year; from January to September 2023, my country's major high-quality special steel production The company's bearing steel output was 3.091 million tons, an increase of 1.78% compared with the same period last year.

2. The output of finished products by bearing steel manufacturers from January to September 2023: the total output of steel plants increased year-on-year

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 is increasing from January to September 2023. The output of steel plants such as Juneng, Zhongtian, Shigang, and Bengang increased slightly compared with the same period last year. Shigang, CITIC Special Steel, Dongte Co., Ltd., and Jianlongbei The output of steel mills such as Manchuria and Xining Special Steel all declined.

2. Performance of domestic bearing steel market

In October, the bearing steel market price fluctuated and weakened, and the market sentiment was slightly cautious. Due to the increase in production costs, the market price of bearing steel was relatively strong at the beginning of the month. However, due to the continued lack of enthusiasm for downstream terminal procurement in the later period, the overall demand performance was relatively weak. At the end of the month, the market price showed a weak and stable trend, with little change. In terms of inventory, in view of the deserted market trading atmosphere, merchants are in a wait-and-see mood and have weak willingness to replenish inventory, so they mainly choose to remove inventory and reduce inventory. Considering that the price of raw materials fluctuates at a high level, which has certain support for the market price of bearing steel, and the planned maintenance output of some steel mills may be reduced, it is expected that the market price of bearing steel is expected to fluctuate and strengthen in November.

3. Relevant market information

1. Raw material price

As of the end of October, iron ore was US$123.5/dry ton, up 2.7% compared with the beginning of the month. At present, negative feedback expectations of steel mills' production cuts are waiting to be fermented. Combined with the impact of production restrictions during the heating season, iron ore demand is gradually weakening. On the contrary, the momentum of iron ore supply will face a seasonal rebound at the end of the year, and iron ore fundamentals are expected to weaken, which will in turn put the ore price under pressure. The early release of negative sentiment in the far-month contract and the continuous release of positive signals from the combined policies will create greater downward resistance. , the monthly difference between contracts will be repaired; the scrap steel price was 2892.7 yuan/ton, down 2.9% compared with the beginning of the month. Scrap steel inventories at steel mills still maintain an upward trend and are at a high growth rate during the year. Since last week, the trend of scrap steel inventory in the fourth quarter of this year has been significantly different from that of last year. The inventory has increased instead of falling, and consumption has also run counter to last year, showing an obvious growth trend; at the end of October, the average price of high-carbon ferrochrome was 8,750 yuan/ tons, down 4% compared with the beginning of the month. Recently, the downstream consumption of high-carbon ferrochrome has been sluggish, steel mills have increased production cuts, and the demand for raw material ferrochrome has weakened. The situation of strong supply and weak demand is difficult to change in the short term, and the ferrochrome market is showing a downward trend. In addition, the power cost advantage in the southern production areas has dropped sharply at the end of the wet season. Factories’ willingness to produce has declined due to poor profits, and some factories will avoid peak production and reduce production. However, some factories have production plans to be implemented in November, and there are still expectations for a certain increase in ferrochromium production. The total domestic output of high-carbon ferrochromium is expected to be 692,400 tons in November 2023.

2. Downstream industries

Data released by the China Association of Automobile Manufacturers shows that in September 2023, my country's automobile production and sales reached 2.85 million units and 2.858 million units respectively, a month-on-month increase of 10.7%, and a year-on-year increase of 6.6% and 9.5% respectively. Both production and sales hit a record high for the same period in history. Among them, new energy vehicles continued to maintain rapid growth, with monthly production and sales reaching 879,000 vehicles and 904,000 vehicles, respectively, an increase of 4.3% and 6.8% month-on-month, and a year-on-year increase of 16.1% and 27.7% respectively, with a market share of 31.6%. From January to September 2023, my country's automobile production and sales totaled 21.075 million units and 21.069 million units respectively, a year-on-year increase of 7.3% and 8.2% respectively. Among them, the cumulative production and sales of new energy vehicles were 6.313 million units and 6.278 million units respectively, a year-on-year increase of 33.7% and 37.5% respectively, and the market share reached 29.8%.

4. Summary

In October, the price range of the bearing steel market fluctuated, and the market sentiment was mainly wait-and-see. Downstream terminal demand was released slowly, and transactions were lower than the same period in previous years. In order to avoid risks and operate cautiously, traders have weakened their willingness to replenish their warehouses and mainly focus on destocking and reducing inventories. Therefore, factory warehouses and social warehouses have decreased month-on-month. Considering that the prices of raw materials such as iron ore are at high levels and fluctuating, and some steel mills have maintenance plans, the output of bearing steel will be slightly reduced, but demand is unlikely to improve in the short term. It is expected that the bearing steel market may show a strong trend in November.