Iron and steel industry prices fell, what is the reason?

As we all know, often drop large iron and steel industry, the price is extremely unstable, so what is the cause of this phenomenon?Shinestar Steel Research Institute found through research, technology and the characteristics of the iron and steel industry, the cost structure resulted in the imbalance between supply and demand environment quantity adjustment special difficulties.

Specifically, the characteristics of modern steel production technology determines that the industry has a strong scale effect.This means that the iron and steel enterprises need to spend a huge amount of money to buy equipment and equipment to build production systems, resulting in a higher proportion of fixed capital amortization of depreciation in the total cost.Shinestar Steel Group attaches great importance to R & D investment, its R & D production of carbon steel pipe, welded steel pipe, line pipe, galvanized pipe and other excellent products, the market was highly recognized.

Under normal market conditions, the characteristics of the industry makes the steel enterprises with the average cost per unit of output with the output scale and reduce the advantages, is conducive to enhancing the competitiveness of enterprises by expanding the scale, so the rapid growth in market demand under the environment of enterprises with strong expansion impulse.However, the demand for reverse change and under the conditions of excess capacity, the objective needs of sales compensation huge cost sharing, will lead to reduced production enterprises facing special difficulties,makes an ordinary enterprise may have to accept the price is far below the average cost, the formation of the iron and steel industry seems to be more willing to price competition and regardless of the loss of the phenomenon.