The development of iron and steel industry is positively related to the development of international economy and domestic economy. A good macroeconomic environment provides a guarantee for the development of the steel market. The speed of economic growth directly affects the demand for steel in various industries, and then affects the price of steel. The economic crisis triggered by the subprime mortgage crisis in the United States has spread to Europe, Japan and other countries, which has led to the shrinking demand for steel products in China and directly affected the export of steel products in China. At the same time, domestic macroeconomic policies and macro-control also have a certain degree of impact on steel prices.

2. Cost increase

According to the definition of economic principles, when supply exceeds demand, prices will fall, and when supply is less than demand, prices will rise. Therefore, the supply and demand situation of steel market directly affects the price trend of steel. At present, China is the largest steel producer in the world, and its main raw material is iron ore. At present, China is also the largest consumer of iron ore in the world, so the price level of iron ore directly affects the price level of steel. According to statistics, the global iron ore price has increased by 7 1.5%, 19%, 9.5% and 65% respectively in the past four years. Therefore, steel prices will also rise sharply. At the same time, due to the sharp increase in costs, some enterprises can't bear this pressure and take measures to reduce production and limit production, which makes the steel market in short supply, which in turn makes the steel price rise.

3. Downstream demand of iron and steel industry

The downstream scope of steel industry is very wide, which is mainly used in real estate, automobile, shipbuilding, machinery manufacturing, household appliances and other industries. The growth trend of these industries directly affects the growth of steel consumption, and when these industries are in poor condition, it will also directly affect the demand for steel. For example, when the world fell into the quagmire of economic crisis, the situation of all industries was not good, which led to a sharp drop in the demand for steel, which in turn led to a drop in the price of steel.

At present, steel futures will come out soon. Through the analysis of these factors, investors can clearly understand the reasons of steel price fluctuation, and then effectively avoid the risks brought by the market.