By Diana Kinch, Dow Jones Newswires
The five mills--Nippon Steel Corp.'s (5401.TO) Muroran and Kimitsu works, JFE Holdings Inc.'s (5411.TO) Chiba and Keihin plants and Sumitomo Metal Industries Ltd.'s (5405.TO) Kashima works in Tokyo Bay--have sustained structural damage and their port facilities are inoperable, Tim Hard, Steel Index director, told Dow Jones Newswires, citing sources in Shanghai.
Assuming the mills are closed for six months, 22.2 million metric tons of iron-ore demand could be removed from the seaborne iron-ore market, Hard said. The mills are supplied by Brazilian miner Vale SA (VALE, VALE5.BR) on contract and they also buy ore from Australian suppliers on the spot market, he said.
The steel mills have been affected by the tsunami which hit Tokyo Bay following the magnitude 8.9 earthquake which hit northern Japan earlier Friday, according to Steel Index. Kobe Steel Ltd.'s (5406.TO) Kakogawa steel mill in western Japan may also have been affected, Hard said.
"Tokyo Bay is a steelmaking center. There are various integrated steel mills there," Hard said. "There are also a host of mini-mills and dock-side scrap-storage facilities nearby which will have been affected, not to mention the port and sea-bordering infrastructure."
The problems shouldn't have any major direct impact on iron-ore prices, as lost shipments of the steelmaking raw material to the mills affected will represent only a small tonnage compared with global seaborne iron-ore which amounts to some one billion tons annually, the Steel Index director said.
"However, this will affect sentiment" in the iron-ore market, Hard said.
Tags :Sumitomo Metal Indutries Ltd., Vale, Tokyo Bay,