Monthly Summary: The market price of bearing steel may fluctuate within a narrow range in December

Monthly Summary: The market price of bearing steel may fluctuate within a narrow range in December

Overview: From January to October 2024, the crude steel production of domestic bearing steel increased by 4.48% year-on-year, and the production of bearing steel increased by 4.13% year-on-year. Looking back at the market situation in November, although the trading volume slightly increased compared to the previous month, the improvement in fundamentals did not reach the expected level. Merchants remained cautious, and market prices were under pressure. As of now, the average price of 50mm (continuous casting) bearing steel in China is 4990 yuan/ton, a decrease of 5 yuan/ton or 0.1% from the beginning of the month. Given the sluggish growth in demand for bearing steel and the decline in export volume, it is expected that the market price of bearing steel will fluctuate narrowly in December.

Ⅰ Domestic production of bearing steel

1. Bearing steel production from January to October 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 October 2024 was 4.0828 million tons, an increase of 4.48% compared to the same period last year; The production of bearing steel by major special steel enterprises in China from January to October 2024 was 3.6074 million tons, an increase of 4.13% compared to the same period last year.

2. Bearing steel production in November 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 October 2024 was 381400 tons. Among them, 308700 tons of rods accounted for 80.94%; 72700 tons of wire, accounting for 19.04%.

According to the research sample, it can be seen that the production of bearing steel bars and wires increased in November compared to September. The total amount of bearing steel increased by 2.78% month on month, rod increased by 0.95%, and wire increased by 11.33%. In addition, most steel mills have not yet started maintenance, and it is expected that significant operations will begin in mid to late December.

3. From January to October 2024, the output of finished products 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 October 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 remained stable and weakened in November. At the beginning of the month, some steel mills introduced a new round of price adjustment policies, and market prices followed suit and fell. In the middle of the month, low-priced resources flooded into the market, and the mentality of merchants gradually weakened. The market demand support was not obvious, and some merchants used loose quotes to promote transactions. At the end of the month, there was still a contradiction between supply and demand in the market, with stable downstream purchases, fewer new orders in the market, and weak and stable market prices. Overall, it is expected that the bearing steel will experience narrow oscillations in December.

Ⅲ Related market information

1. Raw material prices

The 62% Australian flour forward price index is 105.05 US dollars per dry ton, an increase of 2.9 yuan per ton from the beginning of the month and a decrease of 2.8%. From a macro perspective, the Federal Reserve's Gulsby stated that as interest rates gradually approach stable levels, the pace of rate cuts may slow down, and interest rates will "significantly decrease" in the next year. The market's policy expectations for important conferences reignite optimism. In terms of the market, as delivery approaches the end of the month, traders still primarily purchase PB powder. The steel plant still maintains low inventory operation within the factory, with a focus on replenishing inventory for urgent needs. In summary, there is still support for short-term iron ore prices.

The current spot price of high carbon ferrochrome is 7500 yuan/ton, a decrease of 500 yuan/ton or 6.25% from the beginning of the month. On October 28th, the spot price of high carbon ferrochrome remained stable, with chrome ore prices, coke prices, national freight and electricity prices all running steadily. The spot cost of high carbon ferrochrome temporarily stabilized, while inquiries for raw material spot prices were quiet. The upstream and downstream market sentiment was pessimistic, and some spot traders closed their positions. In a strong bearish atmosphere, it is expected that the short-term cost of high carbon ferrochrome will mainly decrease.

The current price of scrap steel is 2210 yuan/ton, a decrease of 40 yuan/ton or 1.77% compared to the beginning of the month. According to research, the winter storage willingness of steel mills this year is relatively cautious compared to previous years, especially as the winter storage expectations of mainstream steel mills have decreased, and the current inventory volume is relatively high, resulting in a small winter storage gap. It is expected that the demand for scrap steel in December may increase to some extent. On the one hand, the current profit of electric furnace plants is in a loss state, and the operating rate and capacity utilization rate have significantly decreased, resulting in low scrap steel consumption. On the other hand, some mainstream steel mills plan to reduce production and maintenance in December, which will also have a certain impact on scrap steel consumption. Overall, the cost of molten iron fell in December, affecting the weakening of scrap steel. However, the supply of scrap steel has tightened, and the current scrap steel inventory is much lower than the same period last year. Coupled with the increased demand for replenishment during winter storage, it is expected that scrap steel prices may fluctuate strongly in December.

2. Downstream industry

According to data released by the China Association of Automobile Manufacturers, in October 2024, the production and sales of automobiles reached 2.996 million and 3.053 million respectively, with a month on month increase of 7.2% and 8.7%, and a year-on-year increase of 3.6% and 7%, respectively. The national policy of exchanging old for new has a significant driving effect on automobile consumption. Auto shows and promotional activities are booming in many places, and enterprises are intensively investing in new car models, which has continued to increase the popularity of the automobile market. In October, automobile sales increased on a month on month basis, and new energy vehicles and automobile exports still maintained rapid growth. Recently, driven by a package of policies, the popularity of the Chinese automobile market has continued to rise. During the period of November to December, factors such as the cumulative effect of policies and the year-end sprint of car companies have contributed to the sustained release of demand for automobile consumption. It is expected that the automobile market will continue to rise next month, or the amount of steel used in automobiles will be maintained.

Ⅳ Summary

With the gradual implementation of a series of macro policies aimed at stabilizing the economy and promoting consumption, which may provide some support for the steel consumption of bearing steel, but the overall market sentiment feedback is flat, the willingness of merchants to stock up has weakened, and market prices have loosened. Most merchants still maintain a fast turnover strategy to ensure liquidity and have a conservative view on the future market trend. Overall, it is expected that there is limited room for market demand to increase, and the price of bearing steel market may experience narrow fluctuations.