Monthly Summary: The market price of bearing steel may Fluctuate Downward in April

Monthly Summary: The market price of bearing steel may Fluctuate Downward in April

Overview: From January to February 2024, the domestic crude steel production of bearing steel increased by 18.08% year-on-year, and the production of bearing steel increased by 14.68% year-on-year. Looking back at the market situation in March, prices fell slightly due to demand suppression, and market transactions were average. Business sentiment was pessimistic. As of now, the average price of domestic bearing steel 50mm (continuous casting) is 5152.5 yuan/ton, a decrease of 40 yuan/ton from the beginning of the month. It is expected that the price of bearing steel in the market will fluctuate downward in April, and continuous attention should be paid to the release of demand in the later stage.

Ⅰ Domestic production of bearing steel

1. Bearing steel production from January to February 2024: year-on-year growth in crude steel and steel mills

From January to February 2024, the crude steel production of bearing steel by major premium steel enterprises in China was 925900 tons, an increase of 18.08% compared to the same period last year; From January to February 2024, China's main premium steel enterprises produced 769900 tons of bearing steel, an increase of 14.68% compared to the same period last year.

2. Bearing steel production in March 2024: month on month increase in steel production

According to the 21 samples collected by the Bearing Steel Research Group, the main premium steel enterprises in China produced 391500 tons of bearing steel in March 2024. Among them, 32.15 tons of bars accounted for 82.12%; 70000 tons of wire, accounting for 17.88%.

According to the research sample, it can be seen that the production of bearing steel in March has increased compared to February in terms of bar and wire production. The total amount of bearing steel increased by 2.3% month on month, the increase in bar materials was 2.65%, and the increase in wire materials was 0.72%.

3. From January to February 2024, 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 February 2024, the overall production of bearing steel slightly increased. Steel mills such as CITIC, Jiyuan, Juneng, Nangang, Zhongtian, Jianlong Beiman, and Laiwu Special Steel saw an increase in production compared to the same period last year, while steel mills such as Dongte Group, Shigang, Bensteel, Jiangsu Yonggang, and Xining Special Steel saw a decline in production.

Ⅱ Performance of Domestic Bearing Steel Market

In March, the price of bearing steel in the market fluctuated downward, and the improvement in market demand was not significant, leading to a pessimistic sentiment among merchants. At the beginning of the month, due to the continuous weakening of raw material prices and a small number of bulk orders in the market, short-term bearish sentiment began to emerge in the market. In the middle of the month, market demand did not improve, and merchant quotations began to decline narrowly, accompanying shipments, but the order volume was not satisfactory. At the end of the month, market prices were significantly suppressed by demand, and prices continued to decline. The speed of social inventory consumption slowed down, and transactions showed signs of weakness. Overall, it is expected that the bearing steel market prices will fluctuate downward in April.

Ⅲ Related market information

1. Raw material prices

The overall trend of iron ore prices in March showed a volatile downward trend, with the port spot price index performing weaker than forward prices. As of March 29th, the forward spot price index of 62% Australian iron ore powder was 97.8 US dollars/dry ton, a decrease of 16.62% from February. The PB powder price at Qingdao Port was 757 yuan/ton, a decrease of 16.81% compared to the previous month. The price difference between the current and future iron ore prices narrowed, and the spot import profits of most varieties narrowed slightly during the month. In terms of price, it is expected that the import ore prices in April will fall compared to March, and the specific trend is expected to show a rhythm of first rising and then falling. The key factor affecting mining prices in April is still the degree of recovery on the demand side.

The current spot price of high carbon ferrochrome is 8800 yuan/ton, an increase of 200 yuan/ton compared to the beginning of the month. Recently, the prices of chrome ore, coke, national electricity and freight have remained stable, and the production cost of high carbon ferrochrome has temporarily stabilized. Recently, there have been mixed fluctuations in the raw material market, with a slight increase in chromium ore futures and a landing in the seventh round of coke price hikes. The total cost range is still at a high level, and it is expected that the cost of high carbon ferrochrome will operate steadily in the short term.

The current price of scrap steel is 2260 yuan/ton, a decrease of 300 yuan/ton compared to the beginning of the month. In terms of the market, with the continuous deep decline in scrap steel prices, the overall willingness of upstream waste production enterprises and social recycling bases to ship has decreased. Recently, the amount of goods received by processing bases has decreased. Due to the instability of scrap steel prices, many bases have received goods at a deep drop of 50-100 yuan/ton in advance, and it is expected that the scrap steel market will experience weak and volatile operations in the short term.

2. Downstream industries

According to data released by the China Association of Automobile Manufacturers, in February 2024, the production and sales of automobiles reached 1.506 million and 1.584 million respectively, a decrease of 37.5% and 35.1% month on month, and a decrease of 25.9% and 19.9% year-on-year. Among them, the production and sales of new energy vehicles reached 464000 and 477000 respectively, a year-on-year decrease of 16% and 9.2%. February coincides with the Spring Festival, and the actual number of operating days in automobile factories has significantly decreased. Analysis shows that the automotive industry had good production and sales from a low base in January to February 2024. However, due to high competitive pressure, profits mainly relied on foreign wealth and high-end luxury goods. Most other companies experienced a sharp decline in profits, and some companies faced increased survival pressure. Due to the profitability of fuel vehicles, but with a rapid contraction; New energy vehicles have seen high growth, but have incurred significant losses and faced significant pressure from conflicts. Therefore, the central and various levels of government have stabilized automobile production, actively stabilized the consumption of fuel vehicles, and the overall situation of the automobile industry is stable and improving.

Ⅳ Summary

In March, the price of bearing steel in the market fluctuated and weakened, indicating a pessimistic sentiment among merchants. At present, the price difference between GCr15 and 45 # carbon bonded steel is gradually expanding, with some steel mills increasing the price difference from 400-500 yuan/ton to 600-700 yuan/ton. In terms of supply, the maintenance was completed in February, and the production of bearing steel increased, resulting in a slight accumulation of social inventory. In terms of demand, the market trading atmosphere in March has rebounded compared to February, but there is a significant gap compared to the same period last year. Mainly due to the slower than expected recovery of market demand, downstream demand is in a weak trend, steel mill profits are narrowing, and market prices are fluctuating. Overall, the market's optimistic expectation of a rebound in future demand still needs to be viewed with caution, and it is expected that the price of bearing steel in the market may fluctuate downward in April.