Nowadays, one kilogram of steel is less than a cabbage expensive "seems to have become the steel trading business mantra.
 
This is not groundless. Since the beginning of this year, steel prices fell frequently. It is understood that the ordinary class II rebar market, the price of high speed wire has fallen to 4000 yuan / ton, equivalent to 1 kg of steel prices is only 4.0 yuan, the farmers market on a 4 kg multiple cabbage about 4.5 yuan. It seems that the price of one kilogram of steel is indeed less than a cabbage, which seems to have become the curse of the troubled steel industry.
 
Study the fundamental reason is the imbalance between supply and demand, in the final analysis, is due to the steel overcapacity. Steel mills in order to keep the "market share", not easily cut. Steel Association forecast that the June crude steel output may be maintained at a high of 200 million tons. Moreover, the steel industry in China's large production capacity, even a small number of steel production, yield reduction is limited. Now, steel mills, the overall operating rate has not been a rapid drop of market prices start still at a high level.
 
Today, China's crude steel production is estimated to have reached 900 million tons, the demand for full played count only 700 million tons, an excess of 200 million tons, is in a serious supply and demand imbalance.
Having said that, has been formed of steel production capacity does not release hard, seeing the upfront investment of billions of dollars, hundreds of billion yuan, blast furnace, converter built and put into production, how can recover the investment? And blast furnace ignition, and then you want to shutdown more difficult.
 
The blast furnace is a continuous large-scale production, half-way extinguished shutdown, re-ignition furnace cost as much as several million dollars, and thus the steel mills are not easily put out the furnace.
 
Loss is less serious cases, steel mills tend to reduce feeding and other measures the elasticity of production, it is difficult to curb the release of capacity have been built. The author believes that the most effective control capacity is not blind expansion, new production capacity, in particular, homogenization of duplicate capacity.
 
However, it is worrying is that the homogenization of the capacity expansion has not been effectively controlled, even high-end steel, homogeneous competition is very intense. Take the special purpose of the outer diameter greater than 245mm large diameter seamless steel pipe is concerned, according to preliminary statistics, as of 2010, there were production line has more than 20 production capacity of more than 5.5 million tons; 2011 a new production line 10, production capacity of 3 million tons; 2012 will be on four production lines, production capacity 2.5 million tons. Then, the country will have a production capacity of 11 million tons of these large-caliber seamless steel pipe. In just two years time, its capacity increased by 100%. According to the experts predict that, in recent years, this large-diameter seamless actual annual demand of less than 4.5 million tons.
 
Look in steel pipe manufacturing, billet continuous casting great circle of the flange of wind power, wind power bearings, engineering machinery, with the rotary support and other industries, according to incomplete statistics, as of the end of 2010, there were production line 11, the production capacity of approximately 5 million tons ; 2011 on four of the production line, production capacity 2 million tons; 2012 will be new or retrofit of four production lines, with production capacity of 2 million tons. Casting great circle blank demand is less than 500 tons, a serious oversupply.
 
These high-end special steel production line scale of investment in a production line at least to invest several hundred million dollars, or even larger. Once confined to limited demand and can not play production capacity, then the final loss or investors and production companies.
Therefore, "one kilogram of steel is less than a cabbage" the crux of the steel production capacity of blind expansion, leading to a serious oversupply, the homogenization of an increasingly competitive. I believe that to get rid of this curse, the steel industry but also in accordance with the policy direction of the country's steel industry, strict control of the production capacity. In this way, in order to promote the steel prices return to a reasonable price.



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