Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21
CISCO 2020 Dot com Bubble Stock vs 2021 Bubble Tech Stocks Warning Analysis - 6th Oct 21
Precious Metals Complex Searching for a Bottom - 6th Oct 21
FB, AMZN, NFLX, GOOG, AAPL and FANG+ '5 Waves' Speaks Volumes - 6th Oct 21
Budgies Flying Ability 10 Weeks After wings Clipped, Flight Feathers Cut Grow Back - 6th Oct 21
Why Silver Price Could Crash by 20%! - 5th Oct 21
Will China's Crackdown Send Bitcoin's Price Tumbling? - 5th Oct 21
Natural Gas News: Europe Lacks Supply, So It Turns to Asia - 5th Oct 21
Stock Market Correction: One More Spark to Light the Fire? - 5th Oct 21
Fractal Design Meshify S2, Best PC Case Review, Build Quality, Airflow etc. - 5th Oct 21
Chasing Value with Five More Biotech Stocks for the Long-run - 4th Oct 21
Gold’s Century - While stocks dominated headlines, gold quietly performed - 4th Oct 21
NASDAQ Stock Market Head-n-Shoulders Warns Of Market Weakness – Critical Topping Pattern - 4th Oct 21
US Dollar on plan, attended by the Gold/Silver ratio - 4th Oct 21
Aptorum Group - APM - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 3rd Oct 21
US Close to Hitting the Debt Ceiling: Gold Doesn’t Care - 3rd Oct 21
Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
Original Oculus VR HeadSet Rift Dev Kit v1 Before Facebook Bought Oculus - 3rd Oct 21
Microsoft Stock Valuation 2021 vs 2000 Bubble - Buy Sell or Hold Invest Analysis - 1st Oct 21
How to profit off the Acquisition spree in Fintech Stocks - 1st Oct 21
�� Halloween 2021 TESCO Shopping Before the Next Big Panic Buying! �� - 1st Oct 2
The Guide to Building a Design Portfolio Online - 1st Oct 21
BioDelivery Sciences International - BDSI - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 30th Sep 21
America’s Revolving-Door Politics Behind the Fall of US-Sino Ties - 30th Sep 21
Dovish to Hawkish Fed: Sounds Bearish for Gold - 30th Sep 21
Stock Market Gauntlet to the Fed - 30th Sep 21
Should you include ESG investments in your portfolio? - 30th Sep 21
Takeda - TAK - High RIsk Biotech Stocks Buy, Sell, Hold Investing Analysis for the Long-run - 29th Sep 21
Stock Market Wishing Away Inflation - 29th Sep 21
Why Workers Are NOT Returning to Work as Lockdown's End - Wage Slaves Rebellion - 29th Sep 21
UK Fuel PANIC! Fighting at the Petrol Pumps! As Lemmings Create a New Crisis - 29th Sep 21
Gold Could See Tapering as Soon as November! - 29th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Japan Earthquake’s Effects Felt Round The World

Commodities / Metals & Mining Apr 04, 2011 - 03:28 AM GMT

By: Anthony_David


Best Financial Markets Analysis ArticleBesides the massive human toll, Japan’s catastrophic earthquake and tsunami has destroyed the region’s civil and industrial infrastructure. Water and electricity supply have been adversely impacted forcing several businesses to slow down or stop operations completely and the chance of radiation from the nuclear reactors at the Fukushima Daiichi power station has increased people’s fears.

The natural disaster has disrupted supplies to manufacturers of products as wide ranging as ships to semiconductors. CLSA analysts said, “Japan remains critical to the global tech food chain. Beyond damage to facilities, supply chain disruptions driven by road, port, power outages are key factors to watch.” They estimated that Japan manufactures about 20% of the world’s technology products and a disruption in supply from Japan would create one of the biggest threats to the global technology supply chain.

Japan is one of the largest users of rare earths and the slowdown in business has translated to a slowdown in the global demand for rare earths as well. The disaster is expected to temporarily stem the rise in rare earth prices but the long-term forecast still stands – demand will outstrip supply.

Furkhat Faizulla, marketing manager at Advanced Material Japan Corp. said, “So if 50 percent of the consumption of the world is in Japan and this 50 percent stops for a couple of weeks, or a couple of months, this will be a huge impact on the consumption side or the demand site”.

Along with providing humanitarian relief, Japan’s government is naturally keen to restore the power grid in the affected areas and bring the nation’s economy back on track. However, until that time, Japan’s rare earth processing capacity will be seriously affected since the processes are highly energy intensive. Under such circumstances, analysts expect rare earth deliveries to Japan to slow down significantly over the next few months. That would mean an increase in the market supply of rare earth metals, which could mean a short-term fall in the prices.

The disruption to port operations also means a delay in shipments of rare earth metals from Japan. On the other hand, the unpredictability of China’s restrictive export policies is likely to make Japanese traders receive all the previously ordered materials that are delivered.

The earthquake and tsunami will also have a significant impact on the global steel market. The tsunami reportedly flooded steel plants of leading steel makers such as Nippon Steel Corporation, Sumitomo Corporation and JFE, among others. Operations had to be stopped since the scrap and raw material storage yards, and the finishing lines of many plants along the Pacific coast lay in the path of the tsunami. Nippon Steel has since resumed shipments from all but its Kaimishi plant in northern Japan.

Analyst Kim Hyun tae at Hyundai Securities said, “The earthquake has reportedly affected around 20% of the Japanese steel production capacity. It will disrupt production in Japan, one of the major steel producers exporting 40% of its output. In contrast, steel demand will rise for damage restoration.“

The inactive ports have brought Japan’s coke, iron ore and scrap import shipments to a halt as well. Japan is a major importer of all three and the fall in demand is likely to result in a price drop. China’s reduction in iron ore demand has already impacted prices and with a concurrent drop in Japan’s demand, the prices are likely to see a further fall.

The finished steel market will see the opposite effect. Japan is a major supplier to the Far East and other South East Asian nations and with outbound shipments stopped, demand will suddenly rise. Of course, there would be no shortage of supply, as China, the CIS and South Korea would gladly fill in the gap. The move will be immediately reflected in the higher prices of long and flat products.

The failure and explosion in two of Japan’s nuclear power plants has caused a 10% loss in Japan’s power supply. The situation shows the risks of depending on only one source of energy, especially one that can cause so much contamination. In the wake of the crisis, Germany was the first European nation to temporarily shut down seven of its old nuclear power plants. Experts will now analyze the security features of the reactors. Switzerland and Finland are some of the other European nations that are reassessing their nuclear safety and rethinking their nuclear power policies.

The secondary effect of the nuclear strategizing is that more traders are focusing on renewable energy sources, especially solar power. In fact, Germany’s Solarworld AG saw a 30% jump in its stock after the government announced its nuclear power plans. Nuclear energy currently contributes 23% of Germany’s total energy supply and renewable energy about 16%. By 2020, renewable energy is expected to meet 47% of Germany’s energy demand.

Japan’s unfolding nuclear incident has already cast doubts about the nuclear power strategy of the US. Even before the incident, investors have been wary about committing money to nuclear projects and with Japan’s current situation, enthusiasm is sure to dip even further. While some are arguing that Japan’s Fukushima Daiichi power station is over 40 years old, others are of the opinion that the public is unlikely to be convinced about the invincibility of new nuclear power projects.

By Anthony David

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report

© 2011 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in