Cost of raw materials extrusion
 
Easy to up iron ore-based raw material prices and costs going down, "high. A large domestic steel enterprise executives admitted that the first three quarters of 2011, steel upstream bulk raw materials and fuel prices continued sharp rise, after entering the fourth quarter, steel prices have come down substantially, driven by iron ore prices fall, but the iron ore prices fall significantly decline in steel prices, even more worrying is that as long as the steel prices rebounded, iron ore prices will soon follow up, and the greater the rate of increase.
 
The three mines still in the resource monopoly, is also relatively strong domestic demand for crude steel production, iron ore prices have fallen substantially unlikely "these executives said, in addition, coal prices have been at high levels in 1-4 months coking coal prices rose 0.6%, injection coal prices rose 4.37 percent. According to the monitoring of the Iron and Steel Institute, CIOPI imported iron ore prices from last year's lowest 128.4 U.S. dollars / ton, rose in mid-May this year to $ 152.9 / t, has risen $ 24.5 / t.
 
Overcapacity does not change
 
The steel industry is facing overcapacity, industrial concentration low, "the problem is still very prominent.
 
According to CISA statistics, 500 of steel production capacity of enterprises, iron production capacity of more than 700 enterprises, rolling enterprises 3000-4000, crude steel production capacity has reached 900 million tons, while local SMEs the yield is still significant growth. Iron and Steel Association member companies crude steel production fell 0.6 percent in January-May, but crude steel production of non-member companies have increased drastically by 18.5%, the yield stress of the disorder brought about by competition.
 
China is the world's largest steel producer, accounting for 45 percent of global production, the world's 10 largest steel mills in China accounted for 6. The mainland's full capacity is expected to reach 940 million tons this year - 220 million tons more than demand. "The situation is bad, we've never seen such a large overcapacity, the person in charge of Australia's commodity advisory body Michael , says.
At present, China is estimated that 2700 steel plants, many of which are inefficient small plants, the production of low value products; large steel plant has been transferred to the technology ladder the top, but the high-end product oversupply. Although the macro level, intends to eliminate backward production capacity, industry mergers and acquisitions, but to achieve this goal it is not easy. Insiders said that "the priority goal of the central and local government, local officials do not want to close the factory to provide employment opportunities and tax paid.
 
Industry, high cost, low efficiency of the situation difficult to reverse in the short term. "Industry sources, due to weak demand and steel prices have dropped significantly, some companies have taken to repair cuts and other measures to make iron and steel production capacity release rate eased, but Nissan level is still at a high level, high-yield competition also makes the steel prices difficult to substantially increase the expected post-steel market will continue to oversupply, prices will remain low volatility.



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