First, the euro zone disintegration will be the final blow to market
This year due to the debt crisis in Europe clouded the economic slowdown, weak demand, overall steel prices lower volatility. July and August, the Shanghai Futures steel t price of a continuous breakdown of 4000 yuan / ton and 3800 yuan two integer points. Looking forward to the steel market outlook, if the debt crisis in Europe is serious deterioration, or even the euro area the disintegration of the situation, would not rule out the market suffered a final blow, once again the price bottom may be.
 
The present situation, the existence of the European debt crisis continues to worsen, even the great possibility of the disintegration of the euro area. This is unpopular fiscal austerity, the debt crisis countries the successful implementation of fiscal austerity in exchange for external assistance, with great uncertainty. The euro zone assistance funds come from? Greece, Ireland, Portugal, Spain, the four countries national debt is about ? 20,000 per capita. The data also show that the debt service peak in October 2012 mid-term, the European pig country needs to repay debt amounted to ? 700 billion, far beyond the financial capacity of relief agencies. The international rating agencies continue to drop the euro-zone countries debt rating, the international relief hesitates. Third, the debt crisis is still spreading, and spread to the countries of "too big to fail" after seeking external aid, following Spain, Italy and let it calls for a comprehensive assistance. "Troika" is currently being considered by Greece's fiscal austerity program, the audit report can be released in September this year. If the assignment results of the new Greek government rescue loan conditions fall far short of that is bound to halt the external assistance. Then Greece due debts disorderly breach of contract, and to Spain, Italy and proliferation, which opened the euro zone to the disintegration of the prelude. In such extreme circumstances, the Chinese economy and downward pressure to further increase the market panic deepened, when t price of the Shanghai Futures steel main contract may be approaching, or even below 3500 yuan / ton. This should be a high degree of vigilance.
 
Second, whether and Taylor steel prices bottoming out
 
Never just down the goods do not rise. Extremes meet, if the steel market suffered deterioration of the debt crisis in Europe, the euro area to the disintegration of the final blow, comprehensive recovery of the steel market situation will be followed by the arrival of the new bottom, at least not far off.
 
First, the price drop approximation costs, and improve the relationship between supply and demand. It should be said, after the shock downstream of the period of time, the majority of steel prices approaching the cost line. Such as Shanghai rebar futures t prices approaching or below 3500 yuan / ton, and its average cost is similar, iron and steel enterprises profits sharply decline, or even losses. Although steel prices in the doldrums drag, iron ore smelting material prices are also lower, but the latter decline was lower than the former. This is not only the world's mining giants to the implementation of the limited production price (this year, a quarter, the ring of the world's four major mine iron ore production fell 12.5%, Brazil's CVRD production decreased by 15.6%; the first half of CVRD production decreased by 0.8% over the same period), but also because Chinese iron ore to a higher marginal cost of production. According to the data, the cost of production at this stage more than 30% of the domestic iron ore production (converted to dry basis tax), generally in the vicinity of 800 yuan / ton -900 yuan / ton, about $ 130 / t. If the iron ore t price of a longer period is less than the price will inevitably lead to shrinking production, its price form a strong support. Steel and iron ore decline synchronization differences, determine the drop of steel prices is bound to bump into the bottom of the hard costs.
 
Affected, China crude steel production this year show a continued down trend in June year on year growth has dropped to 0.6 percent for the lowest level in three years. If steel prices close to or below cost, the situation continues, there will be a crude steel production down situation. This is the cost of promoting the recovery of steel prices and supply factors.



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