Cost is not support of the key factors in the price
 
This year, the port has remained in the imported iron inventory 95 million-100 million tons between. At present, the port high inventory by the following factors affect: one is the iron ore import grade decline, even from Brazil and Australia imported ores also presented grade declined year by year trend, the port inventory ore grade lower than usual, to meet the normal production will need more smelting ore; 2 it is now on the iron ore market also has similar financing copper phenomenon, caused part financing iron ore piling up in port; Three is usually enterprise has the certain safety stock days to ensure that production need, but at present, the enterprise and the trade generally inventory reduction in safety stock days following, cause resources piling up in port; Four European market is due to the weak, this should be part of the European market supply to iron ore be transported to China. All sorts of factors stack, iron ore in the port always high inventory.
 
March spot prices rising appear round steel market, because iron ore inventory on the high side, curb prices space, ore price rise less than steel. Mid-april steel price fell drive raw material prices fall with ore etc, steel and raw material prices fall quite, high inventory makes ore price pressure serious. After four months of the fall, the long material production enterprise in a small profit or near break-even point. In the short term to raw material costs steel price is still play a supporting role, cost is dynamic index, it is the price of factors support, but it's not the key factor, played a key role in price support the factor is the demand.

Downstream demand weak don't change
5 month for 48.8% steel PMI, dropped back again to RongKu offline party, fell by nearly 7% than last month, including new orders index dropped sharply in the 17.7% to 41.5%, meaning that downstream demand serious insufficiency. And finished goods inventory is running 10.8%, to 61.6, since 2011 the third of the high. Steel downstream demand remains weak performance, at the same time, increasing the price pressure caused by inventory serious.
 
Steady growth stimulus for demand effect need certain time, short-term won't appear. At the same time, the steady growth policies although involve such as infrastructure, auto and home electrical appliances consumption steel project, but to the real estate industry is not see obvious stimulation.
 
From pulled effect to see, because the real estate industry directly influence the upstream and downstream in many industries, and so it's pull the price of steel is most evident, pull the fastest. May be the real estate industry fine-tuning influence, the more property market turnover significantly warmer, the price also mild rise. But this year the housing regulation overall won't appear relaxed, for the price of steel is difficult to pull function significantly.
 
The process may break off to inventory
 
From march a start, the key national city into the channel to inventory. By June 1,, spiraling steel for 13 weeks inventory decline, accumulative total reduce 1.65 million tons. However, with the south, north of high temperature weather rainy season comes, and the site construction progress may be slow phenomenon. In addition, because the production of enterprise at present has not appeared yet mass reduction and discontinued phenomenon, supply pressure still nots allow to ignore. Under the double flank, when social inventory decline speed might appear obvious narrowed and may even have to interrupt the process of inventory, social inventory not down the phenomenon, high stock reaction in price, make the steel prices confined to the downside.
 
Overall, at present the main contradiction steel basic performance for the supply pressure still and downstream demand is not enough, the short term this won't appear obvious contradiction to ease. Although the cost for steel price temporarily supportive, but don't improve on the demand of the background, the steel price challenges of low before possible.




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