Let the market, steel mills operating at a loss is not crazy expansion
Since the financial crisis of 2008, with a rebound in domestic steel prices bottoming, the state has invested 4 trillion economic stimulus plan to drive the rapid growth of the real estate, highway and rail infrastructure, machinery, automobile and other industries, while almost all of the key industries The basic raw materials are inseparable from the support of the steel, the steel industry to become the ultimate beneficiaries of the 4 trillion economic stimulus plan. From the second quarter of 2009, after the steel mills produced steel is always profitable; steel trading business resources from steel mills and ordered never to worry about sales, is the long-term, stable profit margins to attract the entry of a large number of capital. Since then, the steel mills began the process of rapid expansion. China's new blast furnace 59 in 2010, for a total volume of 98213m3, to add iron production capacity of 50.48 million tons as of 2010; 2011, China's new on blast furnace 63, 2012 the blast furnace is expected to add at least 34, three years expansion of production capacity of nearly 200 million tons. The latest data show that as of early 2012, China's crude steel production capacity has reached about 900 million tons. And since 2009, started construction of a production capacity of 300 million tons, an increase of 50% compared with 2008, the total production capacity.
 
2006, rebar, high-speed wire rod production technology is no longer a big steel mills in the pursuit of new hot spots, from the 2007 profit was significantly higher than the standing timber of hot rolled coil products, hot rolling line to become the steel mills rapid growth the pursuit of the goal, after 2008, when the plate and strip production technology into the mature stage, put into the finished hot-rolled production line in March to meet the quality requirements, which is what makes that time a number of large state-owned steel mills and private enterprises big fast on hot-rolled production lines, capacity growth rate of more than 50 million tons per year; 2010, hot rolled coil market share of close to saturation, the steel mills began to march towards the higher end of the cold rolling silicon steel process, so 2010 cold-rolled and silicon steel succession surplus, itself cold-rolled silicon steel take the volume is small, cold-rolled steel, silicon steel market is more difficult after 2012, the average daily sales of cold rolled less in the more than 500 tons of large and less.
 
Steel mills operating in a difficult, or even into a loss situation, but not willing to take the initiative to cut the steel mills almost, because the product homogeneity serious, as long as you cut, downstream, or agents can purchase from another steel mill, which runs on your market share, after a run out and then re-enter the more difficult, so many steel mills have a "let not let the City" mentality. All steel mills believe: big belly could eat rice, long life to eating a meal. Therefore, starting from September, the large state-owned steel mills rely on strong capital began to join hands to deal with the dealer, substantial retroactive losses in July and August, traders, agents available in the market survival survival earnings. In the case of steel piles of oversupply and falling steel prices, lost customers, customers do not worry about not buy steel, even if you price re-adjustment, because you do not have an advantage, do not want to take the initiative to help customers customers can get it back is very difficult, and the loss of some customers may never be regained. Steel mills do not want to take the initiative to cut production, mainly due to the cut will be the loss of market share, discontinued the resettlement task of local governments to maintain growth and tax, banks stopped lending risk considerations. Therefore, the formation of the the current steel mills cut thunder, little rain "status.



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