Monthly Summary: The market price of bearing steel may increase slightly in March

Monthly Summary: The market price of bearing steel may increase slightly in March

Overview: In February 2024, the domestic production of bearing steel decreased by 6.50% year-on-year. Looking back at the February market, considering the high initial costs, some steel mills have seen an increase in ex factory prices. However, the market is in a recovery stage after the holiday, and the domestic bearing steel market prices are stable and trending towards strength. As of now, the average price of domestic bearing steel 50mm (continuous casting) is 5197.5 yuan/ton, an increase of 10 yuan/ton compared to the beginning of the month. Based on the current market, there is some room for demand to be released after market recovery, and it is expected that the bearing steel market price may show a slight upward trend in March.

Ⅰ Domestic production of bearing steel

1. Bearing steel production in February 2024: month on month reduction in steel production

According to the 21 samples collected by the Bearing Steel Research Group, the main premium steel enterprises in China produced 382700 tons of bearing steel in February 2024. Among them, 31.32 tons of bars accounted for 81.84%; 69500 tons of wire, accounting for 18.16%.

According to the research sample, it can be seen that the production of bearing steel in February has shrunk compared to the previous month, and the production of bar and wire has both declined. The total amount of bearing steel decreased by 6.50% month on month, with a decrease of 5.75% in wire rods and 8.55% in wire rods.

2. Since 2023, the production of finished materials by various bearing steel production enterprises: the total production of steel mills has declined month on month

At present, the production enterprises with larger output of bearing steel are CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Special Steel), Jiyuan Steel, and Juneng, accounting for 39%, 10%, and 9% respectively. In February 2024, the production of bearing steel decreased slightly, with steel mills such as CITIC Special Steel, Jiyuan, Juneng, Dongte Co., Ltd., Zhongtian, Shigang, and Bensteel all experiencing a reduction in production.

Ⅱ Performance of Domestic Bearing Steel Market

The overall price of bearing steel in the market remained stable in February, with some prices slightly rising, and businesses were in a strong wait-and-see mood. At the beginning of the month, with the arrival of the Spring Festival holiday, downstream terminal procurement efforts were insufficient, overall demand performance was weak, and market prices did not change significantly. In the middle of the month, it is the Spring Festival holiday, and the market is fully closed. In the latter half of the year, downstream terminals and traders are gradually resuming work and production, and market demand is recovering. In terms of inventory, considering the gradual arrival of ordering resources before the holiday, the overall social inventory has slightly increased compared to last month. Considering that market demand may be released, it is expected that the price of bearing steel in the market is expected to stabilize and strengthen in March.

Ⅲ Related market information

1. Raw material prices

After the Spring Festival, the relatively loose supply of iron ore combined with lower than expected demand recovery has led to a significant decline in iron ore prices, which continued to rise before the holiday. The recovery of iron ore demand is not as expected. Although the supply side is in a seasonal off-season stage, the demand is relatively loose compared to the 45 port iron ore inventory, which continues to accumulate over multiple periods. There is still a risk of a short-term pullback in iron ore prices. As of the end of February, iron ore was $117.1 per dry ton, a decrease of 11.82% compared to the beginning of the month.

The current price of scrap steel is 3031 yuan/ton, a decrease of 0.39% compared to the end of last month. The cost-effectiveness of scrap steel underwent a tremendous transformation in February, with scrap steel prices remaining stable at high levels due to scarce resource supply. Due to the weak cost-effectiveness of scrap steel, although the supply of production and scrap has not yet recovered, the current supply and demand are basically in a balanced state. With the warming weather, the supply of scrap steel will show an upward trend. However, the demand for scrap steel requires two hard supports: the recovery of steel plant profits and the return of cost-effectiveness advantages.

The average price of high carbon ferrochrome is 8700 yuan/ton, which is unchanged from the beginning of the month. The spot price of high carbon ferrochrome has remained stable, while coke prices, national freight and electricity costs have remained stable. The cost of spot smelting for high carbon ferrochrome production has increased by 4-31 yuan/50 basis tons. The current trend of chromium ore is maintaining a strong trend, and the fourth round of coke increase is landing quickly. The total cost is still slightly rising, and it is expected that the short-term cost of high carbon ferrochrome will remain stable.

2. Downstream industries

According to data released by the China Association of Automobile Manufacturers, in January 2024, the production and sales of automobiles reached 2.41 million and 2.439 million respectively, a decrease of 21.7% and 22.7% month on month, and a year-on-year increase of 51.2% and 47.9%, respectively. The domestic sales of automobiles reached 1.996 million units, a decrease of 24.9% month on month and a year-on-year increase of 48.1%. The export of automobiles reached 443000 units, a decrease of 11.2% month on month and a year-on-year increase of 47.4%.

In January 2024, the production and sales of new energy vehicles increased rapidly year-on-year, with a market share of 29.9%. The production and sales of new energy vehicles reached 787000 and 729000 respectively, a decrease of 32.9% and 38.8% month on month, and an increase of 85.3% and 78.8% year-on-year. The domestic sales of new energy vehicles reached 629000 units, a decrease of 41.8% month on month and a year-on-year increase of 93.3%. The export of new energy vehicles reached 101000 units, a month on month decrease of 9.8% and a year-on-year increase of 21.7%.

Ⅳ Summary

The bearing steel market prices remained stable in February, and market demand did not reach the expected level. Returning from the holiday, downstream terminals and traders have fully resumed work and production, and the market is in the recovery stage. Meanwhile, some steel mills underwent maintenance in February, resulting in a slight decline in overall bearing steel production. With the gradual release of policies that promote economic stability and progress, the market atmosphere will become increasingly active in the later stage, and market demand may be slightly released. It is expected that the price of bearing steel in the market will slightly increase in March.