Steel prices in Asia are likely to rise after an earthquake and tsunami closed ports in Japan, and could have affected its steel mills, constraining exports from the world's second largest producer, analysts said.
All Japanese ports closed and discharging operations stopped after the country was hit by its biggest earthquake on record and a 10-metre tsunami, shippers said.
Damages at steel plants have yet to be assessed but the ports' closure was already enough to squeeze supply, analysts said.
"The most important thing is if ports and the stockpiles have been affected," said Melinda Moore, commodities analyst at Credit Suisse.
If anything in the supply chain has been affected steel prices are likely to go up. If blast furnaces have been turned off, that would be bullish for steel."
But she added that Japanese blast furnaces are big and well made and unlikely to have been heavily affected.
JFE holdings (5411.T: Quote), the world's eighth largest steel producer, said it was as yet unable to assess the impact of the earthquake on production.
Reuters was unable to reach Nippon Steel (5401.T: Quote), the world's seventh-largest steel producer, which has a plant in an area among the worst affected by the earthquake. A fire has affected Sumitomo Metal Industries' Kashima Steel, but the extent of damage was not known.
"You could see steel prices go up because Japan is a big exporter to Southeast Asia," said Colin Hamilton, a senior analyst at Macquarie Securities.
"Someone has to step in and fill the gap, and they have to be incentivised with higher prices."
Japan will also need more steel and cement once rebuilding starts, analysts said.
"We could see that Japanese steel exports decline because they need more steel for domestic purposes," Sverre Svenning, director of research at broker Fearnleys, said.
"So it may be that Japanese steel exports decline, Chinese steel exports might increase - they are still quite low compared to what they were before the financial crisis."
Imports of iron ore -- a key steel-making ingredient -- were also affected.
"Early indications suggest the market might see iron ore demand decline by roughly 20 million tonnes during the next six months if these mills are shut down."
Japan imported 110 million tonnes of iron ore last year, or about 10 percent of global iron ore imports, a source at an iron ore supplier said.
"If additional volumes of iron ore are sold on the market this may have a negative impact on spot prices," he said.