In the face of a weak supply and demand and the stimulus policy beat expectations under the common function of, the Shanghai steel face direction choosing. If the stimulus is not obvious pyramid, monetary policy is not obvious to relax, the Shanghai steel will have than expected to performance, or below 4000 yuan again a line of may. And is expected to be shaken up.
 
First of all, Greece, Spain bank crisis to break out, the country is also frequently ratings cut, the market already fragile repeatedly hit confidence. The European commission report showed that the eurozone economic boom in May from April 92.9 index fell to 90.6, the highest in 31 months low. And U.S. consumer confidence fell to 8 months minimum level, to Europe and America market developed economies worries intensify.
 
Weak domestic economy trends. China's manufacturing purchasing managers in May index (PMI) for 50.4%, more than a drop of 2.9% last month, and the five-month low, showing the economy growth appear certain fell back.
 
Secondly, in the control policy influence, the real estate construction progress has slowed sharply. Recently, parts of the city began to stimulate just need to entering the market orientation, self living rigid demands of the person that buy a house will get more buys a room to chance. But in the property market regulation not substantial to advocate fundamental key, the prospect of real estate market it is still difficult to let person is optimistic. And the real estate market to steel market of substantive pulling, usually in the room give land and project construction enterprises after. From the current situation, development business to the start of new projects are still very cautious.
 
The national bureau of statistics data shows, the average daily in April crude steel production is 2.019 million tons, 1.67% month-on-month growth. Although may appear a sharp drop in the price of steel, but the thick steel output but did not appear to decline significantly.
 
According to the Chinese steel industry association data shows: mid-may the key national large and medium-sized steel enterprise crude steel average daily production is 1.692 million tons, the annulus comparing only decreased by 0.4%; The national estimate crude steel production was an average daily to 2.0395 million tons, 0.3% month-on-month drop. The whole, the national steel output remains high operating status. Steel capacity in excess of serious, "peanuts" can make steel operate at full capacity. But steel mill starts and shutdown of the cost makes it for steel XianChan, stop production is relatively lags measures. Although recent steel price appear declines, but most of the steel mill did not appear heavy losses, later steel supply will remain high operating status.
 
Finally, in general, the cost to the price of steel support action, often is to pass the reduction of steel production even to fulfill. But must realize, steel mill for the price of steel production play a dual role, not for the steel price is absolutely positive news. On the one hand, XianChan would indeed be direct reduce steel supply, improve steel supply and demand. But on the other hand, XianChan will reduce the demand for iron ore, iron ore prices to fall, finally pulled low steel production cost. Therefore, the cut steel price of existing dual role, investors need to particular case is particular analysis.
 
Since the prices of the raw materials is in constant change, investors must to the trend of the prices of raw materials to make rational judgment. If the iron ore price trend bearish, then need to be alert to iron ore prices steel price "help fall" effect, rather than support role. In the macro environment badly, investors should be alert to raw material prices more steel price to the negative effects, investors not to overestimate the production cost of steel price support action.
 
In addition, in extreme cases, decided to whether the key enterprise XianChan, not profits, but the profit margins. As long as the losses there products profit margins, the enterprise will most likely continue to produce, it also weakened to some extent on the support of the steel price cost function.




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