Demand for industrial metals in Japan, Asia’s biggest buyer of aluminum, may tumble as factories shut because of power cuts and damage after the country’s strongest earthquake on record and the tsunami, analysts said.
“We have a drop in demand as well as production,” Akio Shibata, chief representative at Marubeni Research Institute, said today. “Demand will slow for sometime as the future is uncertain because of the power shortages. We have no idea how long this will last,” he said. 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 tsunami represents about 8 percent of gross domestic product, and is host to factories making products from cars to beer. Tokyo Electric Power Co. is seeking to avoid a meltdown of at least two reactors at a nuclear power station by flooding them with water and boric acid to eliminate the potential for a catastrophic release of radiation.
“Demand for base metals, such as copper, zinc and nickel, may drop in the short term,” according to Kim Gyung Jung, an analyst at Eugene Investment & Securities Co. in Seoul. The decline may exceed the cut in production caused by smelter shutdowns, Kim said today by phone.
Aluminum for three-month delivery dropped 0.7 percent to $2,527 a metric ton on the London Metal Exchange today. Copper declined 0.8 percent to $9,116.25 a ton.
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