Ambrian expects the Japanese tragedy to be short term negative for copper demand, medium term positive. While for steel it notes “input materials – short term negative demand, medium term positive for steel demand. Global copper mined production was 14.6 Mt in 2010, Japan imported 5.4 Mt of copper in concentrate for beneficiation in 2010.“We have a drop in demand as well as production. Demand will slow for sometime as the future is uncertain because of the power shortages. We have no idea how long this will last,” Akio Shibata, chief representative at Marubeni Research Institute (World’s second largest buyer of copper), said yesterday (Bloomberg, 14th March 2011)
Companies from Sony Corp, Toyota Motor Corp, Honda Motor Co and Nissan Motor Co to beer maker Sapporo Holdings and refiner JX Nippon Oil & Energy Corp shut facilities in northern Japan after the quake (Bloomberg, 14th March 2011)
In steel, Ambrian notes “A lack of power and general damage to steel smelting facilities as well as disruptions to in-country supply routes should see production substantially lower in the short term. Japan produces roughly as much steel as the USA, but unlike the USA or China, all of its raw materials have to come from seaborne trade (the same is true for copper and aluminium). One would therefore expect that declines in iron ore and copper demand in Japan to have a leveraged effect on sea borne pricing for metals
“So, whilst we think that steel production will suffer in the short term, the real impact will be on iron ore spot prices. We expect this impact will serve to catalyse a further decline in iron ore spot price now that China looks to have restocked steel inventories for the time being (hence no buying support from the latter).
“Metals producers have also announced shutdowns. Pan Pacific Copper, the country’s biggest such smelter, halted operations at its Hitachi Works refinery with a capacity of 120,000 t in Ibaraki prefecture, and it was not clear when they would resume, Masatoshi Kawada, a spokesman at JX Nippon Mining & Metals, said yesterday. (Bloomberg, 14th March 2011)
“Nippon Steel, the biggest producer, said some facilities at its Kamaishi plant are not operating. (Bloomberg, 14th March 2011).“