Commodities Essential - March 29, 2011

Rebuilding Japan.


 … This concept puts a lot more gravity on the power outage situation. The pending blackouts and brownouts could really begin to shake parts of the world that are most connected to component products of Japan.


Some US auto plants are already being shut down for this reason. Automakers in Germany and China likely face a similar dilemma. Major Japanese car makers and parts providers have suspended production as well.


The electronics industry, where Japan’s share of global semi-conductors and silicon wafers supplies is 23% and 60%, respectively, is facing the same predicament. And if you want to know something that typically should never matter to you, Japan is responsible for 90% of the world’s production of bismaleimide-triazine resin, which is used in chips and circuit boards.


This is where the impact would be most felt in China. Much of the electronics exports that factor in to Chinese trade figures contain several important Japanese components. We must be alert to the impact it has on Chinese labor, production and trade in China, especially if supply constraints last longer than expected and longer than can be compensated for by current inventories.


Being that Japan is the world’s third-largest consumer of commodities, what does Japanese disaster mean and what will it mean for supply and demand … and thus, price? 


player. But … 


Commodities Essential. 29 March 2011