Japan’s major trading companies are facing a prolonged slump in iron ore and coking coal prices, as surging Chinese steel exports flood Asian and global markets, weighing on profits for at least the next six months.

Executives at Mitsubishi Corp. and Itochu Corp. said the oversupply is likely to persist through the end of the fiscal year in March, deepening the decline in metals-sector earnings reported by Japan’s major trading conglomerates last week.

China, the world’s largest steel producer, has reached record export levels this year as weak domestic demand—driven by a property market downturn—continues to pressure prices for steel and raw materials. Meanwhile, new U.S. tariffs have added further complications to the global trade environment.

“Given the current state of China’s economy and the demand for iron ore, I believe market recovery will take some time,” said Yuzo Nouchi, Executive Vice President of Mitsubishi, on Tuesday.

Mitsubishi added in its second-quarter results that Chinese steel exports have maintained strong momentum since 2024, when shipments exceeded 100 million tons.

Other trading houses, including Sumitomo and Marubeni, reported similar challenges. Despite efforts by governments from Vietnam and India to the European Union to restrict Chinese steel imports, Chinese exporters have found ways to sustain shipments by expanding into new, tariff-free markets.

“China’s dumping of steel products is spreading from Southeast Asia to the Middle East and now to Africa,” said Keita Ishii, President and CEO of Itochu Corp.

Japan has launched an anti-dumping investigation into certain Chinese and South Korean steel products, though a final decision is still pending. Ishii noted that the impact of anti-dumping and other trade restrictions worldwide “will take some time to materialize.”