Monthly Summary: The market price of bearing steel may still rebound in August

Monthly Summary: The market price of bearing steel may still rebound in August

Overview: From January to June 2024, the crude steel production of domestic bearing steel increased by 5.89% year-on-year, and the production of bearing steel increased by 5.63% year-on-year. Looking back at the market situation in July, market prices were continuously bottoming out due to suppressed demand, terminal purchases were cautious, and market transactions were average. As of now, the average price of 50mm (continuous casting) bearing steel in China is 4985 yuan/ton, a decrease of 109.5 yuan/ton or 2.1% from the beginning of the month. Against the backdrop of the traditional off-season, terminal demand is weak, and the supply-demand contradiction still exists. However, with the implementation of macro policies, the market still has high expectations for it. It is expected that the price of bearing steel market in August may narrow down, and there is still a possibility of rebound after mid month.

Ⅰ Domestic production of bearing steel

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

According to statistics from the Special Steel Association, the crude steel production of bearing steel by major special steel enterprises in China from January to June 2024 was 2.55 million tons, an increase of 5.89% compared to the same period last year; The production of bearing steel by major special steel enterprises in China from January to June 2024 was 2.182 million tons, an increase of 5.63% compared to the same period last year.

2. Bearing steel production in July 2024: Steel production increases month on month

According to the 21 samples collected by the Bearing Steel Research Group, the production of bearing steel by major special steel enterprises in China in July 2024 was 373600 tons. Among them, 308000 tons of rods, accounting for 82.44%; 65600 tons of wire, accounting for 17.56%.

According to the research sample, it can be seen that the production of bearing steel bars and wires increased in July compared to June, but the increase was not significant. The total amount of bearing steel increased by 1.14% month on month, rod increased by 0.81%, and wire increased by 0.39%.

3. From January to June 2024, the finished product output of various bearing steel production enterprises: the total output 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 Steel, and Juneng, accounting for 58% of the total output. The overall production of bearing steel increased slightly from January to June 2024, with production from steel mills such as CITIC, Juneng, Nangang, Zhongtian, Jianlong Beiman, and Laiwu Special Steel increasing compared to the same period last year. Production from steel mills such as Jiyuan, Dongte Shares, Shigang, Benxi Iron and Steel, Jiangsu Yonggang, and Magang all declined.

Ⅱ Performance of domestic bearing steel market

The market price of bearing steel fluctuated downward in July. At the beginning of the month, the release of market demand was weak, with few bulk orders and a clear bearish sentiment in the market. In the middle of the month, downstream customers tend to purchase as needed, with low hoarding intentions, and the price of bearing steel begins to decline. At the end of the month, the market price of bearing steel was significantly suppressed by demand, and coupled with the hot and rainy season, the price continued to decline. According to a survey in August, some steel mills have plans to reduce production with the introduction of new thread regulations, which may alleviate the situation of oversupply in the market. In addition, the market still has high expectations for macro policies. Overall, it is expected that the market price of bearing steel will fluctuate narrowly in August, and there is still a possibility of rebound after mid month.

Ⅲ Related market information

1. Raw material prices

The price trend of iron ore in July was weak, with Mysteel62% iron ore index at 99.2, down 2.65, with a monthly average of 106.15; The 65% iron ore index is 114.7, down 2.6, with a monthly average of 122.05. The inventory of iron ore in Port 45 continues to rise, reaching over 152 million tons, and the iron ore supply side continues to show a loose pattern. Steel consumption is in the off-season, with the switch between the new and old screw thread national standards. The market is under great selling pressure, and steel prices have weakened significantly, driving down iron ore prices. Coupled with poor domestic economic data and signs of economic recession in the United States, macroeconomic sentiment is weak, exacerbating the decline in mineral prices. In summary, it is expected that iron ore prices will continue to fluctuate in the short term.

The current spot price of high carbon ferrochrome is 8700 yuan/ton, a decrease of 200 yuan/ton from the beginning of the month. On July 30th, the spot price of high carbon ferrochrome remained stable, and the national freight and electricity prices remained stable. The spot price of chromite ore slightly decreased by 0.5 yuan/ton, the price of secondary metallurgical coke decreased by 50 yuan/ton, and the immediate production cost of high carbon ferrochrome decreased by 2-23 yuan/50 basis tons. Recently, the chrome ore market has remained weak and stable, with prices further stabilizing as tradable resources gradually decrease. It is expected that the cost of high carbon ferrochrome will remain stable in the short term.

The current price of scrap steel is 2680 yuan/ton, a decrease of 5.96% compared to the beginning of the month, indicating weak fluctuations in scrap steel prices. The transition of new and old national standards for rebar this month, as well as the high temperature and rainy weather, have had a significant impact on steel prices. Steel prices have continued to drop to low points, with rebar prices in some areas falling below 3000 yuan/ton. Electric furnace steel has suffered severe losses, leading to a clear willingness of steel mills to reduce costs and driving the overall trend of scrap steel to be weak.

2. Downstream industry

According to data released by the China Association of Automobile Manufacturers, from January to June 2024, the production and sales of automobiles reached 13.891 million and 14.047 million respectively, an increase of 4.9% and 6.1% year-on-year, respectively. The growth rate of production and sales narrowed by 1.7 and 2.2 percentage points respectively compared to January to May, with new energy vehicles continuing to maintain rapid growth. From January to June 2024, automobile exports reached 2.793 million units, a year-on-year increase of 30.5%. According to Mysteel's research, the number of orders from downstream car manufacturers is gradually increasing, market sentiment is rising, and industry competition is intensifying. This has also to some extent increased the demand for automotive steel. Coupled with the intensified efforts of the trade in policy, it may eliminate the wait-and-see sentiment. It is expected that the steel consumption in the automotive industry will continue to maintain high-speed growth in the later stage.

Ⅳ Summary

The market price of bearing steel fluctuated downward in July. In terms of the market, due to the poor trend of finished material futures and spot prices, some steel mills have taken the initiative to avoid risks, and inventory pressure has shifted to traders, resulting in significant market pressure and a wide decline in bearing steel prices. According to the survey, with the implementation of new regulations on threading in July, some steel mills gradually reduced their production of bearing steel in August. The situation of oversupply in the market and market pessimism may be alleviated. In addition, the market still has high expectations for macro policies, and market prices are expected to stabilize after mid month. Overall, it is expected that the market price of bearing steel will fluctuate narrowly in August, and there is still a possibility of rebound in the future.