Dropping China Demand Shakes Global Steel Price

The contract price (in US dollars) of iron ore procured by leading Japanese corporations (such as NIPPON STEEL & SUMITOMO METAL and JFE HOLDINGS, INC.) has dropped once again. Compared with Q2 this year, Q3 dropped by 8%. This is because China, whose raw steel material production ranks top in the world, is under slower economic recovery, and its excessive capacity is leading to increasing inventory. Due to the decreasing demand of China, the future of international maretial price is turning dim.

The contract price of iron ore in 2013 Q3 is USD 126/ ton, and comparatively the Q2 price will descend for around USD 11/ ton. This is another drop since two quarters ago. Furthermore, the depreciating JP yen will bring about substantial cost surge to Japanese steel companies; however, the impact will be somewhat releaved due to the decrease of international price.