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Investors should keep an eye on Japanese iron ore imports

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Japan’s iron ore market

Japan accounts for 10% to 13% of the seaborne market. So Japanese iron ore imports are another good indicator of iron ore demand.

Japan’s Ministry of Economy, Trade, and Industry releases data for Japanese iron ore imports on a monthly basis. Japan’s iron ore imports for the month of November were 11.31 million tons, which is a drop of 3.1% month-over-month and a gain of 1.3% year-over-year.

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Negative to moderate demand for Japanese iron ore

Japan’s cumulative iron ore imports during the 11-month period of the year totaled 124.38 million tons, remaining more or less flat with the 124.73 million tons imported between January and November last year.

Japan hasn’t taken much advantage of lower iron ore prices, which are down ~49% in 2014. The overall picture indicates a negative to moderate demand for iron ore in Japan.

Weak demand from major consumers of iron ore is putting more pressure on iron ore prices. It also negatively impacts iron ore companies in the seaborne trade, including Rio Tinto (RIO), BHP Billiton (BHP), Vale S.A. (VALE), and Cliffs Natural Resources (CLF). Lower demand also affects funds investing in these stocks such as the SPDR S&P Metals and Mining ETF (XME).

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