Bearing steel market will remain weak in October
Resource from: CBCC Likes:228
Oct 16,2015
Overview
From January to July, the output of crude steel decreased by 8.30% year on year, the output of bearing steel decreased by 9.46% year on year, and the exports fell down by 22.87% year on year. Bearing steel market was still weak in September. Traders generally had no improved sales. The traditional peak season phenomenon "Golden September and Silver October" did not occur this year. Traders mainly depended on inventory reduction sale at low price. The performance of the machinery, automotives, vessels and other downstream industries was not satisfactory, either. Bearing steel market is expected to remained weak in October, but the price adjustment will be limited because of the cost support.
I. Bearing Steel Markets
1. Output
(i) The YOY output of crude steel and bearing steel both decreased from January to August
According to the statistics of Special Steel Association, from January to August 2015, the output of bearing crude steel reported by domestic major steel companies was 1.8395 million tons, decreased by 8.30% over the same period last year; in the same period, the steel output of domestic major steel companies was 1.7528 million tons, decreased by 9.46% over the same period last year, but the growth slowed. For details, see Figure 1:
(ii) The output of finished steel from January to August 2015: most has decreased
Seen from Table 1 that the top three for bearing steel output from January to July 2015 are still Zhongxin Special Steel (Xinye Steel and Xingcheng Special Steel), Dongbei Speical Steel and Juneng Steel. (for Sha Steel, only the yield of Huai Steel is counted). Among these 23 companies, the crude bearing steel ouput of 4 companies rose while 17 fell, 2 out of production.
2. Export: export fell slightly YoY in August
Domestic bearing steel export was 118,180 tons in August, decreased by 22.87% YoY and 4.29% MoM. Total export in the first eight months was 81,700 tons, representing a reduction of 14.09% over the same period last year. In August, Xingcheng Specialsteel reported the largest export volume of bearing steel, 10472 tons, accounting for the vast majority of bearing steel exports.
3. Mainstream price policy in September: The majority of steel mills remained weak on a stable basis
Affected by the poor demand in downstream markets, end-of-season financial constraints and other factors, the domestic bearing steel price was weak on a stable basis in September, while some steel mills had slight drop in the range of 50-100 yuan/ton. According to my investigation on 18 representative companies for their bearing steel production profitability, in addition to only few steel mills was profitable, most of them were at loss to varying degrees. There were also some mills that could break even by excluding counting the financial cost. It is seen from that the current profitability of bearing steel was poor as a whole, and the bearing steel price may remain weak in October without sharp decline.
II. Relevant Markets
1. Raw materials market
(i) Iron ore
(ii) Steel scrap
(iii) High carbon ferro-chrome
Imported ore market went strong and then weak in September, thinly traded with no market enthusiasm. The price floated between 55 and 58 dollars, closed at 56.75 dollar/dry metric ton by the end of the month; Carbon steel scrap market remained depressed, closed at 1136 yuan/ton by the end of the month, down by 3.48% over the previous month; high carbon ferrochrome market was also in the weak trend, closed at 6120 yuan/ton by the end of the month. Since the weak demand showed no sign of improvement, the raw materials market is expected to remain in larger pressure in October, with some staying low in weak trend.
2. Downstream markets
(i) Rolling Bearings
According to the data from China Machinery Industry Association, the output of rolling bearings in August was 1.59553 billion units, 1.56444 billion in July, rose by 19.87% over the same period last month.
(ii) Motorcycles
According to the statistical analysis of China Association of Automobile Manufacturers, market demand was basically stable in August, this year. The output and sales for the month was essentially flat with the previous month, while the YoY decline range narrowed slightly compared with last month. From January to August, the output and sales of motorcycles totaled more than 12 million units, with the YoY decline growing slightly. In August, the output and sales of motorcycle was 1,554,000 and 1,535,800 sets respectively, down by 0.08% and 0.38% MoM, and 7.67% and 9.24% YoY. In the first 8 months, the output and sales of motorcycles industry was totaled 12,653,900 and 12,666,500 sets, down by 8.23 percent and 8.32 percent respectively, with the decline almost same as that in January-July.
(iii) Automobiles
According to the statistical analysis of China Association of Automobile Manufacturers, the production and sales of automobiles stopped falling and slightly rose in August, though still declined YoY. In August, the growth rate of output and sales continued to fall, where the sales were flat year on year with a year earlier, and the output fell slightly. In August, the output of automobiles was 1,569,700 sets, up by 3.41% MoM and down 8.44% YoY; the sales was 1,664,500 sets, up by 10.74% MoM and 2.98% YoY. From January to August, the output and sales of automobiles was 15,182,400 and 15,017,200 sets, wherein, the output fell 0.24%, and the sales were flat.
III. Conclusions
Market performance did not improve in September. The "Golden September and Silver October" theory just had a little more impact on the psychological level. At present, there were no signs of recovery in end customer purchasement. Steel mills reduced their steel production though the market inventory did not change. The current trading situation really can not meet early expectations.
In summary, the raw material price continued to decline, the downstream demand was in the doldrums, the trade situation both home and abroad remained poor, and this can barely change in short term. But, considering that most bearing steel manufacturers are at a loss or in the break-even state, the bearing steel market is expected to remained weak in October, but the price adjustment will be limited.
(ii) The output of finished steel from January to August 2015: most has decreased
Seen from Table 1 that the top three for bearing steel output from January to July 2015 are still Zhongxin Special Steel (Xinye Steel and Xingcheng Special Steel), Dongbei Speical Steel and Juneng Steel. (for Sha Steel, only the yield of Huai Steel is counted). Among these 23 companies, the crude bearing steel ouput of 4 companies rose while 17 fell, 2 out of production.
2. Export: export fell slightly YoY in August
Domestic bearing steel export was 118,180 tons in August, decreased by 22.87% YoY and 4.29% MoM. Total export in the first eight months was 81,700 tons, representing a reduction of 14.09% over the same period last year. In August, Xingcheng Specialsteel reported the largest export volume of bearing steel, 10472 tons, accounting for the vast majority of bearing steel exports.
3. Mainstream price policy in September: The majority of steel mills remained weak on a stable basis
Affected by the poor demand in downstream markets, end-of-season financial constraints and other factors, the domestic bearing steel price was weak on a stable basis in September, while some steel mills had slight drop in the range of 50-100 yuan/ton. According to my investigation on 18 representative companies for their bearing steel production profitability, in addition to only few steel mills was profitable, most of them were at loss to varying degrees. There were also some mills that could break even by excluding counting the financial cost. It is seen from that the current profitability of bearing steel was poor as a whole, and the bearing steel price may remain weak in October without sharp decline.
II. Relevant Markets
1. Raw materials market
(i) Iron ore
(ii) Steel scrap
(iii) High carbon ferro-chrome
Imported ore market went strong and then weak in September, thinly traded with no market enthusiasm. The price floated between 55 and 58 dollars, closed at 56.75 dollar/dry metric ton by the end of the month; Carbon steel scrap market remained depressed, closed at 1136 yuan/ton by the end of the month, down by 3.48% over the previous month; high carbon ferrochrome market was also in the weak trend, closed at 6120 yuan/ton by the end of the month. Since the weak demand showed no sign of improvement, the raw materials market is expected to remain in larger pressure in October, with some staying low in weak trend.
2. Downstream markets
(i) Rolling Bearings
According to the data from China Machinery Industry Association, the output of rolling bearings in August was 1.59553 billion units, 1.56444 billion in July, rose by 19.87% over the same period last month.
(ii) Motorcycles
According to the statistical analysis of China Association of Automobile Manufacturers, market demand was basically stable in August, this year. The output and sales for the month was essentially flat with the previous month, while the YoY decline range narrowed slightly compared with last month. From January to August, the output and sales of motorcycles totaled more than 12 million units, with the YoY decline growing slightly. In August, the output and sales of motorcycle was 1,554,000 and 1,535,800 sets respectively, down by 0.08% and 0.38% MoM, and 7.67% and 9.24% YoY. In the first 8 months, the output and sales of motorcycles industry was totaled 12,653,900 and 12,666,500 sets, down by 8.23 percent and 8.32 percent respectively, with the decline almost same as that in January-July.
(iii) Automobiles
According to the statistical analysis of China Association of Automobile Manufacturers, the production and sales of automobiles stopped falling and slightly rose in August, though still declined YoY. In August, the growth rate of output and sales continued to fall, where the sales were flat year on year with a year earlier, and the output fell slightly. In August, the output of automobiles was 1,569,700 sets, up by 3.41% MoM and down 8.44% YoY; the sales was 1,664,500 sets, up by 10.74% MoM and 2.98% YoY. From January to August, the output and sales of automobiles was 15,182,400 and 15,017,200 sets, wherein, the output fell 0.24%, and the sales were flat.
III. Conclusions
Market performance did not improve in September. The "Golden September and Silver October" theory just had a little more impact on the psychological level. At present, there were no signs of recovery in end customer purchasement. Steel mills reduced their steel production though the market inventory did not change. The current trading situation really can not meet early expectations.
In summary, the raw material price continued to decline, the downstream demand was in the doldrums, the trade situation both home and abroad remained poor, and this can barely change in short term. But, considering that most bearing steel manufacturers are at a loss or in the break-even state, the bearing steel market is expected to remained weak in October, but the price adjustment will be limited.
(CBCC)
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
2.All news edited and translated by us are specially noted the source"CBCC".
3.For investors,please be cautious for all news.We don't bear any damage brought by late and inaccurate news.
4.If the news we published involves copyright of yours,just let us know.
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