Japan Dec. Exports: Ideas Later: Updated on Feb. 2 and 3.

 Article Source:  https://mainichi.jp/english/articles/20220120/p2g/00m/0bu/016000c

Article:

TOKYO (Kyodo) -- Japan's merchandise exports and imports both hit record highs in December on the back of stronger demand for cars and higher energy prices, government data showed Thursday.

Exports jumped 17.5 percent from a year earlier to 7.9 trillion yen ($69 billion), up for the 10th straight month, while imports surged 41.1 percent to 8.5 trillion yen, up for the 11th consecutive month, according to preliminary data released by the Finance Ministry.

As a result, Japan marked a goods trade deficit of 582.4 billion yen in December, for the fifth straight month of red ink.

Ideas:

Even though there was a trade deficit meaning more imports than exports, most likely the only reason for the deficit was the weak yen, which causes an increase of imports prices.

If we were to go to JETRO or any other statistical area we would most likely find the actual quantity of imports and exports and not just the value of the each.

Japan, before the pandemic has always been known as an export powerhouse, even though it imports a lot as a resource poor country. Because of its unique ability to maintain a competitive advantage in certain kinds of products its been an export power for many years.

The idea of a trade deficit also mean there is less going into Japan's current account. When exports are greater than imports then there is a trade surplus, which can increase the current account, kind of like a country's bank account. 

A 41.1 percent increase can only be attributed to the weak yen and a surge in energy prices over the past half year. Its not like all of a sudden there was a surge in demand for imported products in Japan, as the weak yen and the higher energy prices pushed the value of imports higher than the value of exports.

Article:

While the Omicron variant of the coronavirus spread rapidly in Europe and the United States in the reporting month, the impact on Japan's exports to such countries was limited, economists said.

"Amid the pandemic, demand has decreased for services but increased for goods" such as for home appliances due to more people staying at home, said Takeshi Minami, chief economist at the Norinchukin Research Institute.

"As Japan, Europe and the United States trade final goods, rather than parts, the spread of the Omicron variant had little effect on exports," he said.

Ideas:

By this time, after two years of the pandemic, global trade might be back to normal or almost back to normal or at least related to demand for merchandise products.

There might still be some be some limitations here or there related to shipping etc. but its seems not as much as before such as the LA and Long Beach problem last summer when up to a hundred container ships were sitting off the coast of California waiting to be unloaded.

Yes, the services sector in Japan has taken a big hit meaning not as many customers were out and about and were staying more at home which might have resulted in the buying of home appliances, air conditioners, new TV's and so on. 

So places like Yodobashi Camera or Big Camera and major department stores might have seen a surge in the sales of home specific products.

There might have even been a surge in takeout meals as some restaurants, more shopping at supermarkets for food to eat at home, along with maybe some delivery services increased to such as Uber Eats, alhough its been reported some of the food delivery places were on the expensive side. So there might have an increase of bento type meals to take home and eat too.

Article:

The depreciation of the yen also helped to lift exports, Minami said, boosting repatriated profits from products sold overseas.

The Japanese currency weakened 9.5 percent against the U.S. dollar from a year earlier, trading at an average of 113.95 yen in December, according to the ministry.

By item, exports of automobiles rose 17.5 percent from a year earlier, while iron exports swelled 75.1 percent, as supply chain disruptions caused by the coronavirus pandemic gradually eased.

Ideas:

A weak yen always help exporters as they can get more for the products they sell overseas. And the fact that the US is the second largest trade partner with Japan, maybe after China, a 9.5 percent decrease in the yen is a huge surplus for Japanese exporters.

But it must be considered that 2020, even in the fall of 2020. global trade was not even near the pre-pandemic level of 2019, so a result, the 17.5 percent increase in the exports of autos, might have been a result of delayed demand or delayed shipping and 2021 was somewhat of  a catch-up year for exports.

Supply chain disruptions might have eased but there is still the possibility that they can return as manufacturers globally and especially in South-East Asia might still be hit with the omicron situation which could slow down production and the supply chains globally.

An increase of iron ore exports at 75.1 just shows maybe there is a lot of delayed demand and not a actual increase in new demand as delayed iron ore orders were being completed at the same time as current exports orders.

Article:

Japan's exports previously posted a record 7.7 trillion yen in March 2008.

In December, exports to China, Japan's biggest trading partner, climbed 10.8 percent to a record 1.7 trillion yen, rising for the 18th consecutive month, backed by robust demand for semiconductor-related parts and cars.

Shipments to the United States grew 22.1 percent to 1.5 trillion yen, increasing for the third straight month.

The weaker yen resulted in higher import prices for Japan, with crude oil and liquefied natural gas prices more than doubling, up 116.6 percent and 100.5 percent, respectively. The value of coal imports soared 178.4 percent.

Ideas:

The semiconductor industry is a growing industry and will get even bigger in the future as more and more products use semiconductors. So Japan might be on both sides of the semiconductor industry, both as a consumer of semiconductor products and as a producer of semiconductor products.

Despite the pandemic it seems global trade has come back strong, as economies, businesses, and consumers continue to need and use products from everywhere in the world.

But as the omicron situation increases will there still be strong global demand or will there be a pause in there somewhere.

It was reported earlier that the Japanese government, to help the economy and society, was going to give Japan energy suppliers subsidies as a way to help them not pass on their increased costs to the next in the supply chain.

Whether the subsidies are going to be enough remains to be seen. As the weak yen put pressure on importers including energy importers, their profits margins get smaller and smaller and then many have no choice but to pass on some or all of the increase in costs because of the continued increase in global energy costs and because of the weak yen.

Article:

In the whole of 2021, exports rose 21.5 percent to 83.1 trillion yen, advancing for the first time in three years. Iron shipments contributed the most, increasing 48.1 percent.

Imports rose 24.3 percent, up for the first time in three years, to 84.6 trillion yen, with crude oil prices jumping 49.1 percent.

Trade with China saw record highs in value terms, with exports to the country rising 19.2 percent to 18.0 trillion yen, up for the second consecutive year, and imports from the country increasing 16.2 percent to 20.4 trillion yen for the first advance in three years.

Ideas:

Again it must be remembered that trade in 2020 was well below where it should have been which makes 2021 look better than what it should be, as trade between countries was catching up from a lag in 2020.

But an 48.1 percent in iron shipments is interesting as to why there was surge in iron shipments. Of course iron ore is used for many different products including infrastructure project, so most likely is more a making up for less demand in 2020 as many projects and manufacturing activities were slowed or delated due to the pandemic in 2020.

Unfortunately, the only real consensus for the increase in imports as to be an weakening of the Japanese yen and the global surge in energy prices making Japanese imports look more in value than what the quantity really is.

Its good for both Japan and China that trade is robust as trade benefits both countries and is not a zero game, meaning only one wins or gains all of the benefits. World trade is about everyone gaining benefits and not just one country.

Article:

Both the overall export and import figures were the second highest on record, translating into a goods trade deficit of 1.5 trillion yen, following a 388.3 billion yen surplus in 2020.

Looking ahead, economists said the spread of the Omicron variant in Southeast Asia should be carefully watched, amid concern over a repeat of the summer of 2021 when auto parts factories were closed for anti-virus measures.

"Government responses in countries such as Vietnam, Malaysia and Thailand that are key car parts suppliers are especially in focus," said Atsushi Takeda, chief economist of the Itochu Research Institute.

"But since countries have been implementing milder restrictions compared with those against the Delta variant infection surge, there are expectations that the impact on auto output will be limited," he said.

Ideas:

But again it must be remembered that 2020 overall might not have been that good because of the pandemic and because of supply disruptions, supply shipment disruptions, along with demand disruptions, 2021 again might have been just have had a catching up effect, meaning overall trade was just getting back to normal after all of the disruptions of 2020.

However, the fact that there was a trade deficit again might be attributed to an surge in energy prices and a weak Japanease yen which increases the prices or value of the import products coming into Japan.

And the surplus in 2020 can also be attributed to logistics challenges that might have reduced the amount of imports coming into Japan along with the second half of 2020 and a surge in demand for Japanese cars which would have shifted Japan's trade to a suplus and not a deficit.

Its too early to tell what the omicron situation might have on South-East Asian suppliers. But it seems that maybe the omicron situation is not a severe as the delta situation was in the summer of 2021, and or companies in South-Asian countries are now better prepared to the omicron situation compared to the delta situation.

So most likely from here on out,  there will very limited disruptions if any and globally it seems to be milder but more cases.

Time will tell exactly what is going to happen.

Have a nice day and be safe!