Steelmakers Drop, Shippers Fall

123jump.com Staff
09 Sep, 2008
New York City

Stocks in Japan fell as steelmakers, financials and commodities related stocks fell. Brazil based world

[R]5:00AM New York, 7:00PM Tokyo – Brazil based Vale, the world’s largest iron ore miner asks for a second price increase from steelmakers in Asia. Japan budget proposal for fiscal 2009 exceeds by 7% from the previous estimate.[/R]

Japan’s market averages dropped led by commodity stocks as metal prices fell on a rising dollar. However, domestic market related stocks that are insulated from the international markets volatility helped pare losses.

Market Sentiment

In Tokyo trading Nikkei 225 declined 1.77% or 223.81 to 12,400.65, and the broader Topix Index shed 2% or 24.82 to 1,191.59.

In the first section of the Tokyo Stock Exchange 7.9 billion shares worth 872 billion yen were traded and in the second section 193 million shares valued at 2.2 billion yen changed hands.

Of the Nikkei 225 stocks 33 rose, 185 declined, and 7 were unchanged. Resona Holdings led advancers in the index shares with a rise of 7.33% followed by Credit Saison increasing 6.42% after Mitsubishi UFJ made a $1.4 billion offer to increase its stake in Acom Co. to 40%.

Vale Asks Japanese Steelmakers to Pay 12% More

Brazil based world’s largest iron ore miner, Vale is seeking additional price increase from Japanese steel makers, including Nippon Steel Corp., to pay 12% more after the 65% increase in the price of iron ore agreed in February. The news first reported by Bloomberg and was confirmed by 123jump.com sources at Nippon Steel and JFE Holdings Inc.

The additional 12% price hike expected for shipments in October and could add 25 billion yen in costs for the steelmakers. Vale, based in Brazil is seeking to match its price increase from Australian iron ore miners.

Japanese and Chinese steelmakers forecast lower profits on rising iron ore and energy costs and China is encouraging smaller steel companies to merge.

Number of Foreign Workers in Japan Rises

Kyodo News reported on its Web site today that the number of foreigners hired directly by Japanese companies rose to 338,813 by June 30 from 222,929 in the comparable period a year earlier.

China provided 44.2% of the workers at 149,876, while Brazil contributed 20.9% or 70,809 and Philippines provided 8.3% or 28,134.

In addition, Tokyo had 22.8% or 77,080 of the workers, and Aichi Prefecture contributed 13.2% or 44,823, with Shizuoka Prefecture having 6.5% or 22,092 of the workers.

The increase is attributed to a more precise survey method that was conducted by the Ministry of Health, Labor and Welfare, especially after the revised Employment Promotion Law in October.

According to the report, the ministry contends that the number will increase when the final report is compiled.

Japan Budget Requests Exceeds 7%

The Nikkei News reported on its Web site that according to a document submitted to the Cabinet by Finance Minister Bunmei Ibuki today Japan’s budget requests for fiscal 2009 increased 7.3% more than the initial budget to 89.13 trillion yen.

Separately, the online edition of said total deposits at private-sector banks rose to a record 145 trillion yen, which is markedly above their outstanding loan balances as of July 31.

Gainers & Losers

Resona Holdings led advancers in the Nikkei 225 index shares with a rise of 7.33% followed by increases in Credit Saison Co. of 6.42%, in Meidensha Corp. of 3.8%, in Kikkoman Corp. of 2.6%, and Fujikura Ltd of 2.29%.

Resona Holdings and Credit Saison increased after Mitsubishi UFJ made a $1.4 billion proposal to increase its stake in Acom to 40%. Domestic related stocks also gained. Nippon Meat Pack increased 2.21% and Nippon Soda Co gained 1.20%.

Toagosei led decliners in the Nikkei 225 index shares with a fall of 11.50% followed by losses in Chiyoda Corp. of 8.55%, in Mitsui & Co of 8.12%, Sumitomo Metal Industries of 8.03%, and Mazda of 7.55%. Kumagami Gumi dropped 7.3%.

Toagosei Company, the specialty chemical maker and adhesive products and Kumagai Gumi will be dropped from the Nikkei 225 benchmark index and replaces with Hitachi Construction Machinery and Pacific Metals Company.

Commodity stocks fell after gold prices slumped 0.3% to $799.75 and silver shed 0.7%.

Crude oil prices also slipped 1.2% to $105.10 per barrel today.

Shipping lines also dropped as the Baltic Dry Index dropped 3% yesterday. Mitsui OSK Lines declined 6.90%, Kawasaki Kisen slid 5.86% and Nippon Yusen plummeted 4.53%.

Steelmakers declined after Brazil based Vale asked Japanese steelmakers to pay 12% more for iron ore. Kobe Steel fell 5.16% and JFE Holdings declined 4.54%.