Monthly Summary: The market price of bearing steel is expected to stabilize and become stronger in January

Monthly Summary: The market price of bearing steel is expected to stabilize and become stronger in January

Overview: From January to November 2023, the domestic crude steel production of bearing steel increased by 4.61% year-on-year, and the production of bearing steel increased by 4.47% year-on-year. Looking back at the market situation in December, raw material prices continued to rise, but market demand was slightly lower than expected. The domestic bearing steel market prices slightly increased, and there was an increase in market replenishment orders. As of now, the average price of domestic bearing steel 50mm (continuous casting) is 5181.5 yuan/ton, an increase of 21.5 yuan/ton compared to the beginning of the month. According to the current market, there is not a significant improvement in demand, but due to the support of raw material costs, it is expected that the bearing steel market price in January may show a stable and strong trend.

I Domestic production of bearing steel

1. Bearing steel production from January to November 2023: both crude steel and steel increased year-on-year

From January to November 2023, the crude steel production of bearing steel by China's major specialty steel enterprises was 4.236 million tons, an increase of 4.61% compared to the same period last year; From January to November 2023, China's main premium steel enterprises produced 3.825 million tons of bearing steel, an increase of 4.47% compared to the same period last year.

2. From January to November 2023, the finished product production of bearing steel production enterprises: the total production of steel mills increased 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 Special Steel), Jiyuan Iron and Steel, and Juneng, accounting for 58% of the total output. From January to November 2023, the overall production of bearing steel increased. Steel mills such as Jiyuan, Juneng, Zhongtian, Shigang, Bensteel, and Jianlong Beiman saw a slight increase in production compared to the same period last year, while steel mills such as CITIC Special Steel, Dongte Group, and Xining Special Steel saw a decrease in production.

II Performance of Domestic Bearing Steel Market

The price of bearing steel in the market slightly increased in December, and market sentiment remains cautious. At the beginning of the month, due to insufficient downstream terminal procurement efforts, the overall demand performance did not reach the expected level, and the market price changes were not significant. At the end of the month, due to the increase in production costs, steel mills have successively announced price adjustment policies, resulting in a slight increase in the market price of bearing steel. In terms of inventory, given the slightly improved market atmosphere in October and November, the speed of inventory consumption has increased, and some merchants have increased their willingness to replenish inventory. It is expected that the price of bearing steel in the market will remain stable and tend to strengthen in January.

III Related market information

1. Raw material prices

Iron ore prices have been fluctuating and rising throughout the year, with the main futures contracts reaching a two-year high of 998.5 yuan/ton in late November. As of the end of December, iron ore was $139 per dry ton, an increase of 5.58% compared to the beginning of the month. The current price of scrap steel is 3035.5 yuan/ton, a decrease of 1.5% compared to the end of last month. The average price of high carbon ferrochrome is 8700 yuan/ton, an increase of 2.3% compared to the beginning of the month. Recently, the spot price of high carbon ferrochrome has remained stable, with coke prices, national freight and electricity costs remaining stable. The spot price of chromium ore has decreased by 1 yuan/ton, and the spot smelting cost of high carbon ferrochrome production has decreased by 17-74 yuan/50 basis tons. It is expected that the cost of high carbon ferrochrome will remain stable in the short term.

2. Downstream industries

According to data released by the China Association of Automobile Manufacturers, in November 2023, China's automobile production and sales reached 3.093 million and 2.97 million respectively, with a month on month increase of 7% and 4.1%, and a year-on-year increase of 29.4% and 27.4%, respectively. The automotive market continues to perform well, exceeding expectations, with car production reaching a historic high and sales approaching 3 million units. From January to November, the production and sales of automobiles reached 27.111 million and 26.938 million respectively, with a year-on-year increase of 10% and 10.8%, respectively. The growth rate increased by 2 and 1.7 percentage points compared to January to October.

In November 2023, the industrial added value of the automotive manufacturing industry increased by 20.7% year-on-year. From January to November 2023, the industrial added value of the automotive manufacturing industry increased by 12.3% year-on-year, which is 8.0 percentage points higher than that of industries above designated size during the same period.

IV Summary

The price of bearing steel in the market slightly increased in December, and the market demand was relatively cold compared to October and November. Downstream terminal procurement is cautious, basically continuing rigid demand, with transactions lower than the same period in previous years. It is expected that the market price of bearing steel in January may stabilize and become stronger.