Monthly Summary: The market price of bearing steel may stabilize or increase in February

Monthly Summary: The market price of bearing steel may stabilize or increase in February

Overview: From January to December 2023, the domestic crude steel production of bearing steel increased by 5.71% year-on-year, and the production of bearing steel increased by 5.71% year-on-year. Looking back at the market situation in January, there was a slight accumulation of social inventory. At the end of the year, steel plant maintenance increased, production slightly shrank, and market prices remained stable and trending towards strength. In terms of steel mills, some have raised the price of bearing steel varieties by a total of 200 yuan/ton based on changes in the raw material and special steel market. As of now, the average price of domestic bearing steel 50mm (continuous casting) is 5187.5 yuan/ton, an increase of 5 yuan/ton from the beginning of the month. It is expected that the price of bearing steel in the market will stabilize and explore an increase in February, and we should continue to pay attention to the release of demand after the year.

I Domestic production of bearing steel

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

According to statistics from the Special Steel Association, from January to December 2023, the crude steel production of bearing steel by China's major special steel enterprises was 4.628 million tons, an increase of 5.71% compared to the same period last year; From January to December 2023, China's main premium steel enterprises produced 4.178 million tons of bearing steel, an increase of 5.71% compared to the same period last year.

2. From January to December 2023, the finished product production of bearing steel production enterprises: the total production of steel mills increased slightly

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 December 2023, the overall production of bearing steel increased. Steel mills such as Jiyuan, Juneng, Nangang, Zhongtian, Jianlong Beiman, and Bensteel saw a slight increase in production compared to the same period last year. Steel mills such as CITIC Special Steel, Dongte Group, Shigang, Jiangsu Yonggang, Laiwu Special Steel, and Xining Special Steel all saw a decline in production.

II Performance of Domestic Bearing Steel Market

In January, the price of bearing steel in the market remained stable and tended to strengthen, with no significant improvement in market demand. The cost side prices continue to be high, and steel mills have high costs. Some steel mills have introduced a new round of price adjustment policies, leading to an increase in the market price of bearing steel. However, the market demand is average, and coupled with companies entering vacation mode at the end of the month, the market price fluctuation space has narrowed. Therefore, the market price has not been adjusted for this round of price increase. It is expected that the market price of bearing steel will stabilize and explore an increase in February.

III Related market information

1. Raw material prices

As of January 31, the 62% Australian powder forward spot price index for iron ore was 131.8 US dollars per dry ton, a decrease of 6.21% from December. This month, steel mill inventories continued to accumulate, and from the overall changes in inventory structure, the increase in steel mill inventories was mainly in offshore float inventories, with relatively low inventory in ports and factories. Overall, in terms of port inventory, due to a significant increase in arrival volume, the number of ships under pressure at the port has increased compared to last month. To alleviate port pressure, the unloading pace at the port has remained high for most of the time, and the overall import ore unloading volume is much higher than the outbound volume. Port inventory continues to accumulate this month. The current price difference of iron ore has significantly narrowed, and the spot import profits of various varieties have shown varying degrees of expansion within the month. Overall, the 62% Australian flour price index may exhibit weak volatility; As of January 31st, the spot price of high carbon ferrochrome has remained stable, while the prices of chrome ore, coke, national freight and electricity costs have remained stable. The production cost of high carbon ferrochrome for spot smelting has temporarily remained stable. At present, there is a strong atmosphere of waiting for fake in the chromium ore market, and most traders are optimistic about the future. There are slight signs of upward movement in the futures negotiation range, but many spot traders have suspended their quotations. The tone of the February steel auction has been set, and the long-term contract price is still lower than the retail price. Many factories are strongly raising prices under cost pressure, and it is expected that the cost of high carbon ferrochrome will remain strong and stable in the short term.

2. Downstream industries

In December 2023, China's automobile production reached 3.04 million units, a year-on-year increase of 24.5%; The cumulative production from January to December was 30.113 million vehicles, a year-on-year increase of 9.3%. Car sales have also maintained a good growth trend, with sales of 30.094 million vehicles throughout the year, a year-on-year increase of 12%, ranking first in the world for 15 consecutive years. Among them, the sales of new energy vehicles reached 9.495 million units, an increase of 37.9% compared to the previous year, accounting for 31.6% of the total sales of automobiles.

According to the profit data of industrial enterprises in 2023, the profit growth of the equipment manufacturing industry is accelerating, and the supporting role is further strengthened. Looking at different industries, the profits of the railway, shipbuilding, aviation and aerospace transportation equipment, and automotive industries increased by 22.0% and 5.9% respectively compared to the previous year; The electrical machinery industry was driven by new energy industries such as photovoltaics and lithium-ion batteries, with a profit growth of 15.7%; The general equipment industry was driven by the continuous recovery of the industrial chain, with profits increasing by 10.3%.

IV Summary

In January, the price of bearing steel in the market remained stable and slightly strong, with no significant improvement in market demand. At present, the price difference between GCr15 and 45 # carbon bonded steel has widened, with some steel mills having a price difference of 600-700 yuan/ton. Considering cost support, the bearing steel market price has shown strong performance, with some specifications and resource prices slightly adjusted. It is expected that the price of bearing steel in the market will stabilize and explore an increase in February, and more attention still needs to be paid to downstream steel demand after the holiday.