Monthly Summary: The market price of bearing steel may run weakly in January

Monthly Summary: The market price of bearing steel may run weakly in January

Overview: From January to November 2024, the crude steel production of domestic bearing steel increased by 9.19% year-on-year, and the production of bearing steel increased by 5.99% year-on-year. Looking back at the market situation in December, the domestic supply of bearing steel was high, but the demand did not meet expectations, and prices have fluctuated and adjusted within a narrow range until now. As of now, the average price of 50mm (continuous casting) bearing steel in China is 4990 yuan/ton, a decrease of 10 yuan/ton or 0.2% from the beginning of the month. Given the weak release of demand for bearing steel and the decline in export volume, it is expected that the market price of bearing steel will operate weakly in January.

Ⅰ Domestic production of bearing steel

1. Bearing steel production from January to November 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 November 2024 was 4.6246 million tons, an increase of 9.19% compared to the same period last year; The production of bearing steel by major special steel enterprises in China from January to November 2024 was 4.054 million tons, an increase of 5.99% compared to the same period last year.

2. Bearing steel production in December 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 December 2024 was 378500 tons. Among them, 307300 tons of rods, accounting for 81.19%; 71200 tons of wire, accounting for 18.81%.

According to the research sample, it can be seen that the production of bearing steel bars and wires in December decreased compared to October. The total amount of bearing steel decreased by 0.77% month on month, bar decreased by 0.47%, and wire decreased by 2.06%.

3. From January to November 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 66% of the total output. The overall production of bearing steel increased from January to November 2024, with production from steel mills such as CITIC, Juneng, Nangang, Jianlong Beiman, Laiwu Special Steel, and Magang increasing compared to the same period last year. Production from steel mills such as Jiyuan, Dongte Shares, Shigang, Benxi Iron and Steel, and Xinggang all declined.

Ⅱ Performance of domestic bearing steel market

The market price of bearing steel remained generally stable in December. The price of raw materials briefly increased and then stabilized, while the price of bearing steel synchronously increased first and then decreased. Under the inertia of year-end promotions and domestic demand policies, social inventory has been reduced, and traders are cautious in replenishing inventory. Given the weak demand release and the fact that merchants are offering more discounts on shipments, it is expected that bearing steel will operate weakly in January.

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, the production and sales of automobiles reached 3.437 million and 3.316 million respectively, with a month on month increase of 14.7% and an 8.6% increase, and a year-on-year increase of 11.1% and 11.7%, respectively. Compared to last year's order situation, the overall demand in the market has not shown a significant increase, and the proportion of new orders is not high. However, in the current situation where orders in other industries are shrinking, it is still a slightly better performance than other industries. From the perspective of some mentality and production pace in the automotive industry, the mentality of manufacturers is still relatively calm, and it is expected that the car market will maintain the status quo next month.

Ⅳ Summary

At present, the social inventory of steel mills is maintained at the end of the year, driven by the inertia promotion. Merchants are cautious in replenishing inventory at the end of the year, and the market is offering more discounts for shipments. Considering the weakening demand and the impact of the Spring Festival holiday, it is expected that the market price of bearing steel in January will operate weakly.