Monthly Summary: The market price of bearing steel may fluctuate within a certain range in November

Monthly Summary: The market price of bearing steel may fluctuate within a certain range in November

Overview: From January to September 2024, the crude steel production of domestic bearing steel increased by 7.32% year-on-year, and the production of bearing steel increased by 6.66% year-on-year. Looking back at the market situation in October, merchants are cautiously observing. At present, market prices are still dominated by demand, with prices rising first and then falling. As of now, the average price of 50mm (continuous casting) bearing steel in China is 4995 yuan/ton, an increase of 51 yuan/ton or 10.31% from the beginning of the month. Looking ahead to November, if policies continue to strengthen and demand recovers in stages, the market price of bearing steel may fluctuate within a certain range.

Ⅰ Domestic production of bearing steel

1. Bearing steel production from January to September 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 September 2024 was 3.7627 million tons, an increase of 7.32% compared to the same period last year; The production of bearing steel by major special steel enterprises in China from January to September 2024 was 3.2975 million tons, an increase of 6.66% compared to the same period last year.

2. Bearing steel production in October 2024: steel production decreases 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 October 2024 was 371100 tons. Among them, 305800 tons of rods accounted for 82.41%; 65300 tons of wire, accounting for 17.59%.

According to the research sample, it can be seen that the production of bearing steel bars and wires in October has decreased compared to September. The total amount of bearing steel decreased by 7.9% month on month, rod decreased by 7.18%, and wire decreased by 11.16%. Of particular concern is that in October, the emergency command center for heavy pollution weather in some northern regions issued an orange warning for heavy pollution weather. Mysteel's research shows that this warning has had some impact on bearing steel production enterprises, resulting in a decline in production. Due to the fact that trucks below National VI cannot enter the factory for transportation, logistics transportation has also been affected to some extent.

3. From January to September 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 65% of the total output. The overall production of bearing steel increased from January to September 2024, with production from steel mills such as CITIC, Juneng, Jiyuan, Nangang, Jianlong Beiman, Laiwu Special Steel, and Magang increasing compared to the same period last year. Production from steel mills such as Dongte Shares, Shigang, Benxi Iron and Steel, Jiangsu Yonggang, and Xinggang all declined.

Ⅱ Performance of domestic bearing steel market

The market price of bearing steel fluctuated at a high level in October. At the beginning of the month, the market and raw material prices rose, and steel mills introduced a new round of price adjustment policies, resulting in a significant increase in market prices. In the middle of the month, market demand support was not significant, transactions were average, and market prices fluctuated downward. At the end of the month, the black futures market briefly rose, and the sentiment of the finished product market improved. However, demand did not release significantly, and merchants operated cautiously. Market prices remained generally stable. Overall, it is expected that the bearing steel will experience interval oscillation operation in November.

Ⅲ Related market information

1. Raw material prices

The forward price index of 62% Australian flour is 103.35 US dollars per dry ton, and the price of PB flour at Qingdao Port is 758 yuan per ton. In terms of the market, traders are actively shipping, and some traders are optimistic about the market in the short term and unwilling to ship at low prices; Steel mills are still cautious in post holiday procurement, mainly focusing on digesting internal inventory, and port spot purchases are generally average. Steel mills are more active in hauling goods, and the daily port clearance volume remains high. Due to the decline in arrival volume, port inventory has been slightly reduced. In summary, there is still support for short-term iron ore prices.

The current spot price of high carbon ferrochrome is 8000 yuan/ton, a decrease of 300 yuan/ton or 3.6% from the beginning of the month. On October 28th, the spot price of high carbon ferrochrome remained stable, with coke prices, national freight rates, and electricity bills all operating steadily. The spot price of chromite ore decreased by 1 yuan/ton, and the spot cost of high carbon ferrochrome decreased by 9-54 yuan/50 basis tons. The sentiment of chromite ore continued to be sluggish, and the price slightly declined. The future confidence is pessimistic, and it is expected that the cost of high carbon ferrochrome will be weak in the short term.

The current price of scrap steel is 2780 yuan/ton, an increase of 50 yuan/ton or 1.8% compared to the beginning of the month. At present, with the maintenance of steel mill profits and the stabilization of production status, the consumption of scrap steel is steadily increasing. In response to the inventory of scrap steel, the purchasing attitude of steel mills has been relaxed, and the price adjustment strategy is mainly focused on stabilizing the arrival of goods. Some steel mills in certain regions have started to prepare winter storage inventory in advance, and the reserve level of standing inventory has increased, which has eased the pressure on prices. In terms of social inventory, the short-term growth trend is not significant, and most bases still maintain a fast in and fast out rhythm to maintain cash flow. The level of stockpiling and inventory preparation is low, and the outlook for the future market is relatively conservative, but the overall environment for the fourth quarter remains optimistic. It is expected that inventory in November will maintain narrow and limited fluctuations, with an overall increase as the main trend.

2. Downstream industry

According to data released by the China Association of Automobile Manufacturers, in September 2024, the production and sales of automobiles reached 2.796 million and 2.809 million respectively, with a month on month increase of 12.2% and 14.5%, and a year-on-year decrease of 1.9% and 1.7%, respectively. With the strengthening of subsidies for scrapped and updated cars at the national level and the implementation of local replacement and renewal policies, the passenger car market is gradually recovering, especially the terminal retail market continues to strengthen, which has played a significant role in activating the overall market and achieved remarkable results. However, in the later stage, the automotive industry may experience a slight contraction compared to other industries. Due to consecutive months of digestion in the early stage, the order situation has remained in a good operating state. However, due to the easing of inventory digestion in the early stage, there has been a decline in the procurement of raw materials by local automakers. According to the survey of orders in October, half of the companies still maintain their previous orders, and there is a slight shortage of newly added orders. From the perspective of household cars, in addition to the current market saturation, there are still many factors contributing to the increase in domestic demand. Consumers still maintain high confidence in purchasing new energy vehicles, and there will be new turning points in orders in the future. Therefore, it is expected that the steel consumption in the automotive industry will be mainly maintained in November.

Ⅳ Summary

With the release of macroeconomic positive news this month, the market's expectations for the future economy have improved. Bearing steel has shown a high volatility trend with the black futures market, but it has not stabilized after rising as expected, lacking actual support from demand. Bearing steel prices have started to fall since the middle and late of the month, and traders are now cautious in their operations, with inventory levels remaining stable. For November, if macro news and favorable policies continue to strengthen, there may be room for incremental demand for bearing steel, and the bottom price will also be supported.

Overall, it is expected that the market price of bearing steel will fluctuate within a range in November.