Demand for industrial metals in Japan, Asia’s biggest importer of aluminum, may decline as factories shut because of damage or power shortages after the country’s strongest earthquake on record, analysts said.
“You’ve got some production decline and certainly a consumption decline as well,” Jim Lennon, a senior analyst at Macquarie Group Ltd., said in a phone interview today. Japan is the world’s second-largest buyer of copper ore after China.
The northern Tohoku region most affected by the 8.9- magnitude temblor and subsequent tsunami represents about 8 percent of gross domestic product, and is host to factories making products from cars to beer. It also has energy infrastructure including a nuclear power plant that the government said was at risk of a meltdown after an explosion.
Factory shutdowns, power cuts and the impact on consumer confidence may hurt Japan’s GDP for months, while contributing to growth later as the country rebuilds plants, homes and infrastructure, economists said.
“Demand for base metals, such as copper, zinc and nickel, may drop in the short term,” said Kim Gyung Jung, an analyst at Eugene Investment & Securities Co. in Seoul, recalling a similar impact from the 6.9-magnitude earthquake in Kobe in 1995.
Aluminum for three-month delivery dropped 1.6 percent to end at $2,545 a metric ton in London on Friday after falling as much as 3.3 percent. Copper ended little changed at $9,190 a metric ton after dropping as much as 2.2 percent. (Bloomberg)
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