Monthly data: The bearing steel market will be fluctuate in July

Summary : From January to May, crude steel output of domestic bearing steel increased by 27.81 %, and bearing steel output increased by 22.08 %.  Reviewing the bearing steel market in June, affected by the off-season demand, the market demand of related varieties of Special Steel has significantly weakened, and the price of domestic bearing steel market has also declined.  Up to now, the average price of domestic bearing steel 50 mm ( continuous casting ) is 6470 yuan / ton, which is 320 yuan / ton lower than the end of May, and the monthly ring ratio decreases by 4.71 %.  In recent years, the orders of steel pipe mills and forging mills are weak, while the active production reduction of bearing steel production enterprises is insufficient, and the increase of social warehouse and factory warehouse is reflected.  The current demand is still affected by the off-season, and it is difficult to release significantly. It is expected that the price of bearing steel market will show a trend of weakening in July.

1 Output of domestic bearing steel  

( 1 ) Bearing steel output from January to May 2021 : crude steel and steel increased year-on-year  

According to the statistics of the Special Steel Association, the crude steel output of bearing steel in China ' s main excellent special steel enterprises from January to May 2021 was 1.9756 million tons, which increased by 32.03 % compared with the same period last year.  From January to May 2021, the output of bearing steel in China 's main special steel enterprises was 16.929 million tons, an increase of 26.12 % compared with the same period last year.

Fig. 1 : The change of crude steel and steel output of bearing steel in China since 2020 ( unit : tons )

( 2 ) Output of finished products of bearing steel enterprises from January to May 2021 : output of steel mills increased year on year  

It can be seen from Fig. 2 that the current bearing steel production is relatively large, namely, Zhongxin Special Steel ( Xingcheng Special Steel, Daye Special Steel, Qingdao Steel ), Zhongtian and Benxi Steel, accounting for 61 % of the total output.  The overall output of bearing steel increased from January to May in 2021. The output of Beiman, Shagang, Nangang, Xinggang, Jiyuan, Xining, Zhongte and Xining steel plants increased compared with the same period last year, but the output of Jianlong, Shigang, Benxi and Zhongtian steel plants decreased slightly.

Figure 2 : Proportion of bearing steel output to total output in major enterprises from January to May 2021

2 Performance of domestic bearing steel market  

Domestic bearing steel prices showed a downward trend in June, the overall market sentiment is poor. Due to the particularity of the season, the whole country is basically in a state of high temperature and rainy, and June is in a state of accumulation as a whole. The orders of some high-end bearing manufacturers are still available, coupled with the current market downturn again, which alleviates the risk of high prices in the early stage, and also digests some resources, which plays a certain support for the price, and the late price decline space is limited. But feedback from the current downstream situation, automobile, engineering, wind power and other downstream industries of the industry demand is not optimistic, for bearing steel demand or maintain low. In view of the supporting effect of the demand link on the price is relatively limited, coupled with the steel plant capacity release is not reduced, it is expected that the bearing steel market price in July will show a trend of shock weakening.

3. Relevant market information

(1) Raw material price:

The price of iron ore stabilized after rising in June, and the 62% Australian powder index at the end of the month was US$217/dry ton. At present, the profit of steel mills is low, and some steel mills are experiencing losses to inhibit iron ore demand. It is expected that iron ore prices will run weakly in July, but the downward space is limited under the support of fundamentals; the general carbon scrap market has performed relatively strong, with average prices at the end of the month At 3215 yuan/ton. At the beginning of the month, scrap steel continued its upward trend, the arrival of scrap steel from steel mills continued to decline, and scrap steel prices continued to rise. Later, as the price of rebar continued to fall, the profits of steel mills were greatly reduced, and scrap purchase prices were reduced one after another. However, due to the tight supply of scrap, the decline of scrap was not large; the market price of high-carbon ferrochrome continued to rise, with the price at 8022 yuan/month at the end of the month. Ton. Due to the power curtailment and energy consumption dual control policies in Mongolia and Guangxi, the main production areas, output has declined, and the shortage of spot resources has increased after the delivery of long-term cooperation orders. At present, the chromium-based market has a strong willingness to maintain prices, and it is expected that the high-carbon ferrochrome market will operate stably in the short term.

(2) Downstream industries

According to the statistical analysis of the China Association of Automobile Manufacturers, in May 2021, automobile production and sales were 2.040 million and 2.128 million, down 8.7% and 5.5% month-on-month, and down 6.8% and 3.1% year-on-year. From January to May this year, automobile consumption remained stable overall. Judging from the market situation, automobile production and sales this month declined year-on-year. Looking to the future, China's economic operation will be stably strengthened and stabilized for the better, which will play a good supporting role in the stability of automobile consumption. However, the global epidemic situation is still complicated, the recovery of the world economy is very uneven, and the foundation of domestic economic recovery is not yet solid, which also brings certain difficulties to the development of the auto industry. Therefore, we continue to remain cautiously optimistic about the future development of the auto industry.

Figure 4: Monthly car sales and year-on-year changes since 2019

4 Conclusion  

In June, the bearing steel market prices were weak, demand showed a clear off-season characteristics, stock accumulation accelerated.  At present, the price difference between GCr15 and 45 # carbon steel has expanded, and some steel plants have reached 600-800 yuan / ton.

From the perspective of demand, the southern region entered a continuous high temperature weather in July, and the demand was likely to recover significantly. In addition, the capacity release of steel mills was not reduced, and the inventory decline was not as fast as expected.   It is expected that the bearing steel market will show a trend of weakening in July.