Japan Imports: Updated Jan. 1, 2022

 Article Source: https://mainichi.jp/english/articles/20211216/p2g/00m/0bu/016000c

Article:

TOKYO (Kyodo) -- Japan's imports in November surged 43.8 percent in value to hit a record level on higher crude oil costs and the yen's weakness, leading the country to post its largest trade deficit since January 2020, government data showed Thursday.

Imports of goods jumped to 8.32 trillion yen ($72.9 billion), the largest figure since comparable data became available in January 1979, while exports soared 20.5 percent to 7.37 trillion yen, resulting in a goods trade deficit of 954.8 billion yen, the Finance Ministry said in a preliminary report.

The trade balance logged red ink for the fourth consecutive month with imports rising for the 10th straight month on growing prices of crude oil from producers such as the United Arab Emirates.

Ideas:

The trade deficit, meaning more imports than exports should not be major concern, except of course for those keeping records or like to compare exports and imports.

And mentioned, because of the weak yen and and higher crude prices the value of imports were running higher than exports.

But that doesn't indicate the actual quantity or volume of imports vs. exports. White Japan is very muich an import country meaning it has to imports a lot as some say Japan is a recourse scarce country. 

But at the same time Japan is also an export powerhouse, meaning, in terms of quantity its exports a lot globallly and of course the Japanese car industry is about 20 percent of Japan's total exports.

Of course Japan's current account balance decreases, somewhat, when imports exceed imports. But it can still be assumed, as shown, in value, Japan is still bringing in a lot related to exports.

Article:

Exports were up for the ninth consecutive month, led by robust iron and steel product demand from South Korea and semiconductor-making equipment from China.

Japan's car exports rose for the first time in three months, but the year-on-year pace of acceleration remained sluggish at 4.1 percent.

The Japanese yen weakened 8.9 percent from a year earlier against the U.S. dollar in the reporting month, inflating import prices for resource-poor Japan.

Private-sector economists said crude oil prices are expected to remain at a high level for some time, lifting Japan's imports. But exports are also seen growing on an increase in auto shipments as supply chain disruptions stemming from the coronavirus pandemic gradually ease.

Ideas:

Its interesing that there is a lot of demand for iron and still from South Korea, when South Korea has a lot of steel manufacturing companies too and steel in South Korea is in itself, a major export product for South Korea.

Japan's car exports, while sluggish, maybe is still at or above most car export countries.As the supply shortage including semiconductor chips is still a major challenge for most car manufacturers.

The Japanese yen mght be around 116 at this time, but as I was watching a 1998 comedy drama about a Japanese company on You Tube, it showed a the yen at 150. Of course that was during the Asian Financial crisis and during the so-called lost decade period, if you agree about it. But if true or not being that high it indicates the present 116 is not even close to what importers have had to face related to the volatility of the yen.

What might be interesing is to see, if the yen does continue to get weaker, how much will the Bank of Japan let it go before the BOJ or the Japanese government steps, if needed, to help importer with the higher costs they have to pay.

But that, as some might agree or disagree with, might be interfering in normal market behavior and might, as some might say, would distort the market from operating naturually, or some wouild say "let the market be as is" and let it take care of itself and level out over time.

But there is always the concern, while very good for exports, how much do importers have to suffer for the good of exporters.

Article:

Japanese automakers, the country's main exporters, have been forced to cut output since around summer following parts shortages caused by factory shutdowns in Southeast Asian countries due to infection surges and the worldwide semiconductor crunch.

"Since demand was solid, sluggish (auto) exports were due to supply-side issues. Once such situation improves, pickup in exports can be expected," said Masato Koike, an economist at the Dai-ichi Life Research Institute.

Koike said the trade balance may return to a surplus if energy costs become stable, adding that some see demand for crude oil slowing due to the spread of the Omicron coronavirus variant.

Ideas:

No doubt demand for new car purchases and other vehicles has remained solid and the main challenge is the supply side since July.

The challenge is when the energy situation begins to improve. As the energy situation is affecting families and home every costs, gasoline costs for cars/trucks etc. including those vehicles used for logistics and shipping, the use of oil and electricity at most businesses and so on.

For the businesses and even logistics and shipping companies, they will probabaly have no choice but the pass all or some of the costs onto their customers or others in the supply chain, such as increasing shipping costs or passing costs to wholesalers who of course will pass on the costs to the next in line and most likelly to the final consumer, households and so on.

For households, and companies, the extra costs become a constraint, maybe even a major constraint which decrease any extra spending they want or need to do, such as extra spending at supermarkets, or restuarants, or shopping malls.

For businesses it means less for investments and less for increasing salaries of its employees that Prime Minister Kishida has been suggeting that companies do in April 2022 for last few months.

Artricle:

In November, imports from Asia reached a record high at 3.92 trillion yen, up 24.4 percent for the 10th consecutive monthly increase, lifted by semiconductors from Taiwan. Exports to the region grew 24.7 percent to a record 4.30 trillion yen.

By country, imports from the United States surged 43.0 percent to 855.8 billion yen with an increase in medical products. Exports to the country rose 10.0 percent, up for the second month in a row, to 1.30 trillion yen led by construction machinery, but car exports dropped 11.5 percent from a year earlier.

Ideas:

Most likely the imports to Japan and exports from Japan are still related to either delayed demand and or delayed shipments due to the shipping challenges because of the pandemic. 

For example, for much of the summer and fall, the major shipping ports of LA and Long Beach in the US saw as many as 100 container ships just sitting off the coasts of these two ports waiting to be unloaded for a variety of reasons.

And of course unless you check JETRO,and its data and statistics area and other sites, you don't know the real quantity or volume of the imports and exports only the value, which is inflated becuase of the weak yen.

But at the same time, even if the imports are only listed in value and not quantity the amount as listed is still impressive related to how much is actually being imported to Japan, meaning there is a lot of demand for products in Asia and globally.

Article:

From China, Japan's largest trading partner, imports rose 17.2 percent to 1.98 trillion yen, up for the 10th consecutive month, on solid demand for clothing and accessories. Exports to the neighboring country advanced 16.0 percent to 1.58 trillion yen.

With the European Union, Japan's imports increased 39.3 percent to 884.9 billion yen, while exports expanded 16.4 percent to 652.7 billion yen contributed by robust shipment of cars to Poland.

Ideas:

As above some of the demand for imports could still have been delayed or latent demand meaning because of the pademic demand might have been delayed or postponed until better conditions emerged. 

And of course because of shipping challeges that existed since the pandemic began might sitll be contributing to some situations.

But overall it looks like global trade, at least from Japan's side, looks to be getting back to some kind of normal or a new normal of business as usual with the pandemic sitll causing some challenges.

The next question of course is hopefully the omicron virus situation is not going to affects imports and imports too much and not affect normal business activities in Japan too much as business struggle to get back to normal or some kind of new normal of "living with covid".

Have a nice day and be safe! 

And Happy New Year!