Japan Chemical Trading Blog

The latest chemical trading industry insights from Japan, Asia and the world, reported by the President of Daishin Corporation, Masa Oguchi.


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Masa Oguchi
President, Daishin Corporation
Born in Nara Prefecture, Japan, in 1973. Currently lives in Osaka.

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Sales in July-September Period of Japanese Companies Downturn

According to Nikkei Newspaper on August 17th, “the result of a survey carried out among major companies in Japan showed 23% replied that their sales forecast for the July-September period would downturn from the original plan, and only 11% expected better performance”.
We, a trading company specialized in chemical products, saw a slight sales downturn around June, then the sales in July recorded a decline year-on-year as well as from the previous month; sales in August have not been good enough so far.

The economy in the summer has often been slower in recent years and this pattern seems to apply this year again.
53% of 140 major Japanese companies suffered a year-on-year sales decline in July, according to the survey.

Sales in July-September Period of Japanese Companies Downturn

According to Nikkei Newspaper on August 17th, “the result of a survey carried out among major companies in Japan showed 23% replied that their sales forecast for the July-September period would downturn from the original plan, and only 11% expected better performance”.
We, a trading company specialized in chemical products, saw a slight sales downturn around June, then the sales in July recorded a decline year-on-year as well as from the previous month; sales in August have not been good enough so far.

The economy in the summer has often been slower in recent years and this pattern seems to apply this year again.
53% of 140 major Japanese companies suffered a year-on-year sales decline in July, according to the survey.

Japan’s GDP Decreased by 6.8%

According to the announcement of the Cabinet Office, Government of Japan on August 13th, the growth rate of the real GDP recorded -1.7% (-6.8% per annum) in the April to June period.

The negative growth of this period due to the last-minute demands before the consumption tax increase as of April 1st has been incorporated. Transition of demand will be the center of attention. I see the overseas demand in general is still weak, while the domestic demand has not recovered its momentum yet.

Many private research firms predict that capital investments and personal spending are going to increase so that the growth rate of the GDP will recover quickly.
I hope it will.

Japan’s GDP Decreased by 6.8%

According to the announcement of the Cabinet Office, Government of Japan on August 13th, the growth rate of the real GDP recorded -1.7% (-6.8% per annum) in the April to June period.

The negative growth of this period due to the last-minute demands before the consumption tax increase as of April 1st has been incorporated. Transition of demand will be the center of attention. I see the overseas demand in general is still weak, while the domestic demand has not recovered its momentum yet.

Many private research firms predict that capital investments and personal spending are going to increase so that the growth rate of the GDP will recover quickly.
I hope it will.

Condominium Sales in Tokyo Down

According to the announcement of the Real Estate Economic Institute Co., Ltd. on August 12th, the number of condominiums sold in the Tokyo metropolitan area in July fell about 20% year-on-year to 4,222.
Though, until recently, the sales of condominiums seemed to have been strong, it might be reasonable to consider that the housing demand is going to fall in the mid- and long-term in Japan unless some measures are taken, where the birthrate goes on falling and the population is aging.
Interest rates in Japan have been at a historically low level as the Bank of Japan keeps purchasing government bonds so that a mortgage with an interest rate less than 1% is advertised, yet, how far will interest rates fall, real estate prices will not keep rising unless prospects for the structural decline in birthrate improve and a way to growth is paved.
The funding requirement diffusion index indicating the funding requirement for mortgage was -17 in July, the lowest since the survey started.

Condominium Sales in Tokyo Down

According to the announcement of the Real Estate Economic Institute Co., Ltd. on August 12th, the number of condominiums sold in the Tokyo metropolitan area in July fell about 20% year-on-year to 4,222.
Though, until recently, the sales of condominiums seemed to have been strong, it might be reasonable to consider that the housing demand is going to fall in the mid- and long-term in Japan unless some measures are taken, where the birthrate goes on falling and the population is aging.
Interest rates in Japan have been at a historically low level as the Bank of Japan keeps purchasing government bonds so that a mortgage with an interest rate less than 1% is advertised, yet, how far will interest rates fall, real estate prices will not keep rising unless prospects for the structural decline in birthrate improve and a way to growth is paved.
The funding requirement diffusion index indicating the funding requirement for mortgage was -17 in July, the lowest since the survey started.

A Nuclear Power Plant to Resume in Japan

In Japan, the great earthquake and tsunami that occurred on March 11, 2011 caused a catastrophic accident at the power plants in Fukushima.
With the accident as a trigger, approaches to the nuclear power generation in Japan have been reviewed and nuclear power plants had undergone periodic inspections after the earthquake stopped operation one by one.
Currently, all of existing 48 plants in Japan stopped.

Nuclear power plants were assessed for a year based on a new regulation standard established by the Ministry of Environment of Japan considering a more severe defense against natural disasters and terrorism.
As a result, the Sendai Nuclear Power Plant in Kagoshima Prefecture informally passed its inspection on July 16.
If the local community approves it smoothly, the plant is expected to resume operation around October this year.

A Nuclear Power Plant to Resume in Japan

In Japan, the great earthquake and tsunami that occurred on March 11, 2011 caused a catastrophic accident at the power plants in Fukushima.
With the accident as a trigger, approaches to the nuclear power generation in Japan have been reviewed and nuclear power plants had undergone periodic inspections after the earthquake stopped operation one by one.
Currently, all of existing 48 plants in Japan stopped.

Nuclear power plants were assessed for a year based on a new regulation standard established by the Ministry of Environment of Japan considering a more severe defense against natural disasters and terrorism.
As a result, the Sendai Nuclear Power Plant in Kagoshima Prefecture informally passed its inspection on July 16.
If the local community approves it smoothly, the plant is expected to resume operation around October this year.

Will the Population Decline in Japan Ever Stop?

According to a report made by the “Choosing the Future Committee”, a governmental investigative committee comprised of well-informed people, “presently, Japan is heading towards depopulation and being an aged society, and if we continue on this path, it is likely that the decrease in Japan’s population will be approximately 1 million annually 25 years from now (at present, the average is 160,000 annually), and the population will decrease to approximately 87 million in 2060 from the present 127 million, a drop to two-thirds the current number”.

According to the “Basic Policies for Economic and Fiscal Management and Reform 2014”, which was approved in a Cabinet meeting on June 24, the target of “keeping a stable demographic structure with a population of around 100 million in 50 years” has been set.

This is quite a high bar and although no specific measures are specified for attaining this goal, it is considered significant that the government has at least set a target.

In the future, it is expected that the government will come up with drastic and concrete measures before it becomes too late.

Will the Population Decline in Japan Ever Stop?

According to a report made by the “Choosing the Future Committee”, a governmental investigative committee comprised of well-informed people, “presently, Japan is heading towards depopulation and being an aged society, and if we continue on this path, it is likely that the decrease in Japan’s population will be approximately 1 million annually 25 years from now (at present, the average is 160,000 annually), and the population will decrease to approximately 87 million in 2060 from the present 127 million, a drop to two-thirds the current number”.

According to the “Basic Policies for Economic and Fiscal Management and Reform 2014”, which was approved in a Cabinet meeting on June 24, the target of “keeping a stable demographic structure with a population of around 100 million in 50 years” has been set.

This is quite a high bar and although no specific measures are specified for attaining this goal, it is considered significant that the government has at least set a target.

In the future, it is expected that the government will come up with drastic and concrete measures before it becomes too late.

Toyota Plans to Release Fuel-cell-powered Car within This Fiscal Year

According to an announcement made by Toyota Motor Corporation on June 25, “the company will launch a sedan-type fuel-cell-powered car in Japan by March 2015. The price will be around JPY 7 million. The car will be launched in summer 2015 in Europe”.
Using hydrogen as fuel, a fuel-cell-powered car has a system to drive a motor by generating electric power through reaction with oxygen in the air.

I once rented an electric vehicle (EV) in Okinawa. The maximum driving distance of an EV is around 200 kilometers, which is rather short, and the number of charging stations is limited. Therefore, I had to think about charging the vehicle all the time. I remember that it took around 20 minutes to fully charge the battery.
On the other hand, the maximum driving distance of a fuel-cell-powered car is longer, around 700 kilometers, and the hydrogen charging time is only 3 minutes. I am impressed with the high-level convenience of the car. In the future, I expect the establishment of more hydrogen stations will be promoted. However, further innovations for safety is inevitable.

Toyota Plans to Release Fuel-cell-powered Car within This Fiscal Year

According to an announcement made by Toyota Motor Corporation on June 25, “the company will launch a sedan-type fuel-cell-powered car in Japan by March 2015. The price will be around JPY 7 million. The car will be launched in summer 2015 in Europe”.
Using hydrogen as fuel, a fuel-cell-powered car has a system to drive a motor by generating electric power through reaction with oxygen in the air.

I once rented an electric vehicle (EV) in Okinawa. The maximum driving distance of an EV is around 200 kilometers, which is rather short, and the number of charging stations is limited. Therefore, I had to think about charging the vehicle all the time. I remember that it took around 20 minutes to fully charge the battery.
On the other hand, the maximum driving distance of a fuel-cell-powered car is longer, around 700 kilometers, and the hydrogen charging time is only 3 minutes. I am impressed with the high-level convenience of the car. In the future, I expect the establishment of more hydrogen stations will be promoted. However, further innovations for safety is inevitable.

Exports in May declined in Japan

According to the June 18 announcement of the Ministry of Finance of Japan, Japan’s exports in May fell 2.7% year over year to 5,607.6 billion Japanese Yen, recording a decrease year over year for the first time in 15 months.
Looking at each region, exports to China slightly increased by 0.4% to 1,049.7 billion Japanese Yen, but exports to the U.S. and to Asian countries fell from the previous year, 2.8% to 1,010.7 billion Japanese Yen and 3.4% to 3,087.9 billion Japanese Yen, respectively.
Exchange rates have been hovering with a weak Japanese Yen trending lower than USD1 = JPY100 – it seems the slowdown of the Asian economy has impacted this.
I asked some fellow manufacturers and trading companies in the chemical field in Japan about recent economic trends. The volume of orders in April to June has been poor in most companies.

Exports in May declined in Japan

According to the June 18 announcement of the Ministry of Finance of Japan, Japan’s exports in May fell 2.7% year over year to 5,607.6 billion Japanese Yen, recording a decrease year over year for the first time in 15 months.
Looking at each region, exports to China slightly increased by 0.4% to 1,049.7 billion Japanese Yen, but exports to the U.S. and to Asian countries fell from the previous year, 2.8% to 1,010.7 billion Japanese Yen and 3.4% to 3,087.9 billion Japanese Yen, respectively.
Exchange rates have been hovering with a weak Japanese Yen trending lower than USD1 = JPY100 – it seems the slowdown of the Asian economy has impacted this.
I asked some fellow manufacturers and trading companies in the chemical field in Japan about recent economic trends. The volume of orders in April to June has been poor in most companies.

Shrinking Japanese Population

According to an announcement dated June 4th by the Ministry of Health, Labor and Welfare, the number of births in Japan in 2013 was 1,029,800, which is down by 7431 from 2012 and the number of deaths in Japan in 2013 was 1,268,432, which is up by 12,073 from 2012.
Subtraction shows that the population of Japan decreased by 238,632.

Although the total fertility rate was 1.43%, which exceeded the value of the previous year of 1.41%, it is obvious that unless the rate becomes over 2, the population will continue to shrink.
Especially, the total fertility rate in Tokyo was 1.13%, which was well below the national average.

The leading cause of deaths was cancer (28.8%), followed by cardiac disorders (15.5%). Suicide ranked 7th with 2.1%. The number of male suicide victims was 18,146 and the number of female suicide victims was 7,892. There is a difference.
The number of people who passed away from old age was 16,807 for men and 52, 877 for women.

Shrinking Japanese Population

According to an announcement dated June 4th by the Ministry of Health, Labor and Welfare, the number of births in Japan in 2013 was 1,029,800, which is down by 7431 from 2012 and the number of deaths in Japan in 2013 was 1,268,432, which is up by 12,073 from 2012.
Subtraction shows that the population of Japan decreased by 238,632.

Although the total fertility rate was 1.43%, which exceeded the value of the previous year of 1.41%, it is obvious that unless the rate becomes over 2, the population will continue to shrink.
Especially, the total fertility rate in Tokyo was 1.13%, which was well below the national average.

The leading cause of deaths was cancer (28.8%), followed by cardiac disorders (15.5%). Suicide ranked 7th with 2.1%. The number of male suicide victims was 18,146 and the number of female suicide victims was 7,892. There is a difference.
The number of people who passed away from old age was 16,807 for men and 52, 877 for women.

Japan’s Output Gap Narrowed

On May 23, the Cabinet Office of Japan announced that the Output gap (GDP gap) in the Q1 of 2014 recorded -0.3%, reduced the negative value from -1.6% in the Q4 of 2013.

The output gap of Japan has been negative after the failure of the Lehman Brothers for 23 consecutive quarters from the Q3 of 2008. However, the negative gap has been the smallest in the past 23 quarters.

A negative output gap indicates that demand is not sufficient for domestic supply.

Although a significant reduction in the negative gap is a good trend, it may be merely because of the last-minute demand due to the consumption tax increase in April. I will continue to pay attention to the Q2 data this year.

The following table shows the transition in the output gap since the Q1 of 2008.

2008 Q1Q2Q3Q42009 Q1Q2Q3Q4
+1.8%+0.5%-0.7%-4.0%-8.0%-6.4%-6.5%-5.0%
[table “6” not found /]
[table “7” not found /]

Source: Website of Cabinet Office of Japan

 

Japan’s Output Gap Narrowed

On May 23, the Cabinet Office of Japan announced that the Output gap (GDP gap) in the Q1 of 2014 recorded -0.3%, reduced the negative value from -1.6% in the Q4 of 2013.

The output gap of Japan has been negative after the failure of the Lehman Brothers for 23 consecutive quarters from the Q3 of 2008. However, the negative gap has been the smallest in the past 23 quarters.

A negative output gap indicates that demand is not sufficient for domestic supply.

Although a significant reduction in the negative gap is a good trend, it may be merely because of the last-minute demand due to the consumption tax increase in April. I will continue to pay attention to the Q2 data this year.

The following table shows the transition in the output gap since the Q1 of 2008.

2008 Q1Q2Q3Q42009 Q1Q2Q3Q4
+1.8%+0.5%-0.7%-4.0%-8.0%-6.4%-6.5%-5.0%
[table “6” not found /]
[table “7” not found /]

Source: Website of Cabinet Office of Japan

 

Increase in U.S.-bound Container Cargoes

According to the announcement made by Japan Maritime Center on May 19th, during the first quarter of this year, Asia to U.S. container cargo volume increased by 4.8% year-on-year to 3.322 million TEU.

In March alone, the volume was 1.051 million TEU. Its breakdown was as follows:  0.636 million TEU from China, an increase by 25.9% year-on-year, 62,000 TEU from South Korea, an increase by 9.7%, and 59,000 TEU from Japan, an increase by 0.7%.

Although the freight is continuously showing a downward trend, according to a forwarder, it might have hit bottom at the moment and it is expected that the freight will increase gradually from now on. However, the expectation is not always reliable.

Since 2010, U.S.-bound cargo volume is growing every year. This might mean that the total shipping tonnage of container vessels is growing faster than that of cargo volume.

According to the Technical Note of National Institute for Land and Infrastructure Management (2012), the total shipping tonnage of container vessels has shown an approximate tenfold increase during the 20 years from 1990 to 2010.

Increase in U.S.-bound Container Cargoes

According to the announcement made by Japan Maritime Center on May 19th, during the first quarter of this year, Asia to U.S. container cargo volume increased by 4.8% year-on-year to 3.322 million TEU.

In March alone, the volume was 1.051 million TEU. Its breakdown was as follows:  0.636 million TEU from China, an increase by 25.9% year-on-year, 62,000 TEU from South Korea, an increase by 9.7%, and 59,000 TEU from Japan, an increase by 0.7%.

Although the freight is continuously showing a downward trend, according to a forwarder, it might have hit bottom at the moment and it is expected that the freight will increase gradually from now on. However, the expectation is not always reliable.

Since 2010, U.S.-bound cargo volume is growing every year. This might mean that the total shipping tonnage of container vessels is growing faster than that of cargo volume.

According to the Technical Note of National Institute for Land and Infrastructure Management (2012), the total shipping tonnage of container vessels has shown an approximate tenfold increase during the 20 years from 1990 to 2010.


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