Monthly Summary: The market price of bearing steel may be adjusted within a narrow range in July

Monthly Summary: The market price of bearing steel may be adjusted within a narrow range in July

Overview: From January to May 2023, the domestic production of bearing steel crude steel decreased by 1.98% year-on-year, and the output of bearing steel decreased by 4.40% year-on-year. Looking back at the market in June, driven by macro policy stimulus and expected strengthening, the domestic bearing steel market price stabilized and market confidence recovered slightly. Up to now, the average price of domestic bearing round steel 50mm (continuous casting) is 5071 yuan/ton, which is 2 yuan/ton higher than that at the end of May, and the month-on-month increase is 0.04%. From the perspective of fundamentals, the situation of weak supply and demand in the market still needs to be adjusted, but as the futures market and raw material prices continue to rise, the overall market expectations will increase accordingly. Looking forward to July, the off-season effect of demand may continue, superimposed on the high temperature and rainy season, and the progress of downstream construction projects will slow down. It is expected that the market price of bearing steel in July may fluctuate within a narrow range.

1. Domestic production of bearing steel

(1) Production of bearing steel from January to May 2023: Both steel and crude steel decreased year-on-year

According to statistics from the Special Steel Association, from January to May 2023, the crude steel output of my country's major high-quality special steel enterprises was 2.0269 million tons, a decrease of 1.98% compared with the same period last year; The output of bearing steel products of the enterprise was 1.7468 million tons, a decrease of 4.40% compared with the same period last year.

(2) The output of finished products of bearing steel manufacturers from January to May 2023: the output of steel mills decreased year-on-year

At present, the production enterprises with large output of bearing steel are: CITIC Special Steel (Xingcheng Special Steel, Daye Special Steel, Qingdao Iron and Steel), Jiyuan Iron and Steel and Shigang, accounting for 58% of the total output. From January to May 2023, the overall output of bearing steel is decreasing. The output of Juneng, Jiyuan, Zhongtian, Benxi Iron and Steel, Xinggang and other steel plants has increased slightly compared with the same period last year. Beiman, Yonggang, Zhongte, Shigang, The output of Dongte, Nangang and other steel mills has decreased.

2. Domestic bearing steel market performance:

In June, the bearing steel market stopped falling and stabilized, and the overall mentality of businesses has improved. Entering July, mainstream bearing steel manufacturers did not substantially stop production and reduce production, while downstream demand may further decline, and the pressure on the supply side is still there. It is expected that the market price of bearing steel will be adjusted within a narrow range in July.

3. Relevant market information

(1) Raw material prices:

Iron ore prices fluctuated at a high level after rising in June, and the current Mysteel 62% Australian powder index is 112.15 US dollars/dry ton. It is expected that the price of iron ore in July may show a trend of falling after consolidation at a high level, and the price at the end of the month is expected to be lower than the price at the beginning of the month; the market price of scrap steel has risen as a whole, and both supply and demand have increased slightly. The average price of scrap steel is 2,513 yuan/ton. It is expected that the price fluctuation of scrap steel in July may be relatively limited; the market price of high-carbon ferrochromium fluctuates slightly, and the price at the end of the month is 8711 yuan/ton. It is expected that the short-term chromium market will be weak and stable.

(2) Downstream industries:

According to the statistical analysis of the China Association of Automobile Manufacturers, in May 2023, the production and sales of automobiles will reach 2.333 million and 2.382 million respectively, a month-on-month increase of 9.4% and 10.3%, and a year-on-year increase of 21.1% and 27.9%. Against the backdrop of a very low base due to the impact of the epidemic in the same period last year, China's auto industry improved in May, and the market is still in a slow recovery stage. From January to May, the cumulative production and sales of automobiles were 10.687 million and 10.617 million, an increase of 11.1% year-on-year. Due to the relatively low base in the same period from April to May last year, the cumulative growth rate of production and sales has further expanded compared with that from January to April.

4. Conclusion

In June, the market price of bearing steel stopped falling and stabilized, and the confidence of spot merchants was boosted. At present, the price of raw materials is relatively strong, the cost has moved up, the ex-factory price of steel mills has followed up, the support of spot resource costs has increased, and the market price has strong resistance to falling. In the recent stage, some bearing steel pipe factories and forging factories have increased inventory pressure, market merchants mainly digest the previous inventory, and the price difference between the price of GCr15 and 45# carbon steel in some steel factories has expanded, and the price difference of some steel factories has reached 650-700 yuan / Ton, downstream worries still exist. It is expected that the bearing steel market in July will show a pattern of narrow fluctuations.