Shanghai Steel recent weakness does not change, began to rebound blocked by the end of July, early August re-emergence of a down market, a record low of 3631. From the spot market by the end of July, a slight rebound failed to extend the re-emergence of panic fell in early August, the weak demand situation is still no improvement. For the current steel prices, weak demand has been short-term difficult to reverse negative factors, the market has been a certain consensus. Manufacturing costs as the biggest differences of the steel market, while iron ore prices is the biggest factor to affect the cost of steel.
 
Outside the mine is still the key to affecting the price of iron ore
China's crude steel output this year will reach 700 million tons, about 1.6 tons of 62% of the iron ore grade calculation to produce 1 ton of crude steel this year about 11.2 tons of 62% of the iron ore grade. Calculated changes in the last year, imports of iron ore and iron ore port stocks of China last year, the consumption of iron ore imports reached 650 million tons, nearly 60 percent dependence on imported iron ore. Domestic mines to steel mills owned mines, more related party transactions. From the point of view of the situation in previous years, the domestic price of iron ore is the basic and the prices of imported iron ore with up or down, and the pricing of iron ore is still in the hands of foreign mines, so an impact on imported iron ore price change the key to the overall price trend of the domestic iron ore.
Iron ore trend of divergence
 
The current global iron ore production remains concentrated in the hands of the small number of companies, led by the three mines, the 2011 global iron ore production was 2.8 billion tons, Rio Tinto, BHP Billiton, Brazil valley three companies accounted for more than 30% of the total output. Brazil, Australia and the three main producing areas in India iron ore production was 11.1 million tons, China's iron ore production was 1.2 billion tons, but the domestic iron ore grade is generally low, mainly to meet domestic demand, Pakistan and Australia and India is still The major iron ore producing areas of the current global market. From here we can see that the judgment of the three mines for iron ore market situation are important to the current iron ore price movements. There are two main differences of the market for iron ore trend: a view that global steel demand is weak, while the profits of the three mines are still relatively high in order to ensure market share and profits decline, the three mines may take the price for the amount of strategy, making the iron ore production continued to rise, prices fall; Another view is that the mainstream grade iron ore production has basically mastered in a few high-grade iron ore production is still relatively monopoly corporate hands, the weak demand for steel, but the production rate of steel production is relatively limited, the demand for iron ore remains strong, the three mines can take the progressive control of production strategies to deal with the decline in iron ore prices, in order to ensure corporate profits.
 
Iron ore to maintain oscillation likely
 
From the long-term trend, due to the global steel production has been close to peak capacity continues to expand to become stable by the global economic slowdown with China and other emerging countries, demand for steel and other factors limit the future growth in demand for iron ore will gradually decline, iron ore Stone from the shortage of the basic balance of supply and demand changes in the price of iron ore has been the lack of a reason for rise sharply. Short term, the supply of iron ore is still relatively monopoly, I believe that the three mines iron ore significant downturn in the cost of large-scale expansion is unlikely. Iron ore price movements have been disadvantaged, the price is easy to fall hard up, which does not conform to the current interests of the three mines. Maintain the current price level is the three mine the best choice, years of iron ore the possibility of rapid decline in the market is still small. Iron ore during the year continuation of the possibility of oscillation to the current iron ore prices, the domestic secondary steel production costs in 3400-3500 yuan / ton.
 
Through the analysis of iron ore prices, we believe that the Shanghai steel in the 3400-3500 range or the strong support of the cost, but weak steel demand does limit the rebound space of the current steel. Shanghai Steel continues to the possibility of consolidation in 3600 near the oscillation, the rally or need to wait for further improvement of the market demand.



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