According to the latest news, the strong earthquake in Japan has resulted in the suspension of production of five steel plants, including Nippon Steel, JFE, and Sumitomo Metal. Some steel mills have even suffered “structural damage†and are likely to face up to six months of downtime repairs. As Japan is an important middle and high-end steel exporter and a major iron ore customer in Asia, the destruction of Japanese steel mills is likely to push up China’s mid- to high-end steel export quotation and hit short-term demand for iron ore.
According to analysts from the Nisshin Shinkansen, the earthquake area affected the production of a large proportion of high-quality steel and other metal materials, automotive engines, and miniature bearings. For some high-end steel products, such as stainless steel, galvanized steel, hot and cold rolled wide strip, special steel and other products, China will have the opportunity to make up for this temporary market vacancy.
“The areas that deserve attention are hot and cold rolled wide strip steel and galvanized steel. In 2010, Japan exported more than 14 million tons of these three types of steel products. Therefore, the price of periodical products will increase, and should be higher than other varieties. The rate will be large. Some high value-added steel prices will continue to be high,†said the analyst. This means that companies such as Baosteel, Angang, Wuhan Iron and Steel, Maanshan Iron and Taigang Stainless, which have medium and high-end steel production capacity, will benefit from this.
As for the impact on the iron ore market, many people in the industry believe that if the damage situation of the Japanese steel mills is exactly what the report said, the marine ore market will likely lose 22,200,000 tons of demand. For miners, there are about 3.5 million tons of iron ore sold each month to face new options, which will ease the short-term supply of iron ore in the world.
In fact, due to the impact of the earthquake in Japan, the price of iron ore swap contracts has already dropped significantly on the 11th. According to data provided by TSI, the iron ore index agency, the main contract of the Singapore Exchange fell by 2% in April on the same day and closed at $150/ton. However, analysts also pointed out that the post-earthquake reconstruction work will revive Japan’s demand for steel.
According to analysts from the Nisshin Shinkansen, the earthquake area affected the production of a large proportion of high-quality steel and other metal materials, automotive engines, and miniature bearings. For some high-end steel products, such as stainless steel, galvanized steel, hot and cold rolled wide strip, special steel and other products, China will have the opportunity to make up for this temporary market vacancy.
“The areas that deserve attention are hot and cold rolled wide strip steel and galvanized steel. In 2010, Japan exported more than 14 million tons of these three types of steel products. Therefore, the price of periodical products will increase, and should be higher than other varieties. The rate will be large. Some high value-added steel prices will continue to be high,†said the analyst. This means that companies such as Baosteel, Angang, Wuhan Iron and Steel, Maanshan Iron and Taigang Stainless, which have medium and high-end steel production capacity, will benefit from this.
As for the impact on the iron ore market, many people in the industry believe that if the damage situation of the Japanese steel mills is exactly what the report said, the marine ore market will likely lose 22,200,000 tons of demand. For miners, there are about 3.5 million tons of iron ore sold each month to face new options, which will ease the short-term supply of iron ore in the world.
In fact, due to the impact of the earthquake in Japan, the price of iron ore swap contracts has already dropped significantly on the 11th. According to data provided by TSI, the iron ore index agency, the main contract of the Singapore Exchange fell by 2% in April on the same day and closed at $150/ton. However, analysts also pointed out that the post-earthquake reconstruction work will revive Japan’s demand for steel.
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