Nippon Steel Corp. and JFE Holdings Inc., Japan’s largest steelmakers, restarted blast furnaces at their factories near Tokyo after a halt triggered by the nation’s strongest earthquake on record.
Sumitomo Metal Industries Ltd., the third-largest producer, won’t likely resume operations at its Kashima plant north of Tokyo “for a while” as the quake damaged blast furnaces and other facilities, Chairman Hiroshi Shimozuma told reporters in Osaka. Kashima produces about half Sumitomo’s crude steel output, forecast to be 13.5 million metric tons this fiscal year.
Japanese manufacturers including Sony Corp. and Sumitomo Metal suspended some production after the 8.9-magnitude temblor struck on March 11, unleashing a tsunami that engulfed towns on the northern coast. Halting operations at major steel facilities won’t likely have a big impact on global seaborne trade of iron ore, a key raw material use to make steel.
“There’s some panic in the iron ore market,” said Hu Muzhong, managing director and co-founder of HK-based Central Minerals Co. and Central Shipping Co. “But I think the impact of the quake is more psychological.” Hu’s company trades $300 million steelmaking material a year, including about 3 million tons of iron ore.
The price of 62 percent-iron ore arriving at China’s Tianjin port fell 13 percent to $167.4 a ton on March 11, from $191.9 on Feb. 16, the highest level since November 2008, according to data from The Steel Index compiled by Bloomberg.
Rebuilding in Japan will require commodities from Australia, the world’s biggest shipper of iron ore and coal, and the quake shouldn’t derail its exports, Citigroup Inc. analysts led by Joshua Williamson said today in a report.
Chinese steelmakers, led by Baoshan Iron & Steel Co. gained today on prospects that Japan’s reconstruction efforts will boost demand. Baoshan Steel rose 2.1 percent to close at 7.22 yuan today in Shanghai, outpacing a 0.1 percent gain on the benchmark Shanghai Composite Index. Wuhan Iron & Steel Co. rose 2 percent in Shanghai, and Angang Steel Co. gained 3.5 percent by 3.40 p.m. in Hong Kong trading.
Japan’s rebuilding effort after the Kobe quake in 1995 was impressive, Citigroup’s Williamson said. “In only two years, all debris had been removed and the entire infrastructure restored,” he said. “While no two natural disasters are very alike, we expect substantial effort to rebuild in an efficient and well-organized manner. The demand for Australian hard commodities such as coal and iron ore should benefit.”
JFE, based in Tokyo, today restarted a blast furnace at a plant in Chiba, a day after it reopened another one in Kawasaki, near Tokyo, said a spokesman for the company who asked not to be identified, citing company policy. The company today closed steel producing lines at its Chiba and Kawasaki plants following power outages stemming from the earthquake, the person said.
Nippon Steel yesterday restarted three blast furnaces at its Kimitsu factory in Chiba, and is also resuming rolling operations, Masato Suzuki, a spokesman for the company, said today by telephone.
The steelmaker stopped production at its Kamaishi plant, in northern Japan, after some facilities were inundated by the tsunami, the company said yesterday in a statement. The plant produces wire rods used in tires and bridges, and Nippon Steel is considering moving production to mills including Kimitsu to maintain supplies, Suzuki said today.
Chinese steelmakers are reluctant at present to buy iron ore as they are depleting their inventories, Central Minerals’ Hu said. The mills may restart purchases in mid-April when the stockpiles will have fallen by about half, he said.
“I’d take this time as a chance to buy because Chinese mills may start to replenish inventories in mid-April,” Hu said in an interview.