Japan's Imports:

 Article Source: https://mainichi.jp/english/articles/20220519/p2g/00m/0bu/037000c

Article:

TOKYO (Kyodo) -- Japan's imports continued to surge in April, hitting a record high on rising energy costs and a weaker yen, leading to a goods trade deficit of 839.2 billion yen ($6.6 billion), government data showed Thursday.

Imports jumped 28.2 percent from a year earlier to 8.92 trillion yen, the highest since comparable data became available in January 1979, according to a preliminary report by the Finance Ministry.

The ninth consecutive monthly trade deficit marked the longest streak of red ink since February 2015, when the country posted a goods trade deficit for 32 months in a row.

Ideas:

When comparing imports and exports its a good idea to think about volume and then value. In this case its seems, because of the weak yen and because of the increase in global energy prices and raw material prices, value migh the main reason there has been a surge in imports and not because of volume. 

Most likely the demand for imports has not changed meaning the volume entering Japan has not changed, but the value of the imports has changed because of the mentioned variables.

As the value of imports increases, the price of course goes up meaning Japan's current account decreases as the trade deficit shows.

Anytime there is a trade deficit imports are more than exports which decreases Japan's current account. 

While the weak yen is good for exports, as is seen in the news a lot, the weaker the yen not only helps exports but begins to be too much for suppliers and importers.

Article:

Crude oil, liquefied natural gas and coal prices have swelled on the back of growing demand amid the global economic recovery from the coronavirus pandemic fallout and supply concerns stemming from Russia's invasion of Ukraine.

For resource-scarce Japan, imported energy costs have been inflated by the recent depreciation of the yen. In the reporting month, the yen briefly hit the 131 level against the dollar for the first time in 20 years.

In April, crude oil imports jumped 99.3 percent to 1.2 trillion yen, up for the 13th straight month. LNG and coal imports rocketed 151.6 percent and 198.6 percent, respectively, the data showed. Overall imports in value terms marked a record for the second consecutive month.

Ideas:

Yes, as the pandemic begins to fade maybe more and more businesses and the economy, and globally, have more energy needs but still the weak yen might be the main reason for the trade deficit and not an overall surge in demand.

Not much can be done in the short term to alleviate the stress on companies and households other than the Japanese government intervening in the market by maybe using price controls, meanning, for some daily products, put a maximum price on for example, bread, eggs, flour, and so on. And then as needed provide subsidies to companies as a way to make sure they don't increase prices.

Companies and consumers are probably going to find ways, as needed, to cut back on some kinds of services or products, commodities, and or find substitutes as a way to save money and maintain budgets.

Article:

The expansion of imports outpaced increased exports, which climbed 12.5 percent to 8.1 trillion yen, up for the 14th consecutive month.

By item, iron shipments advanced 37.1 percent and auto exports grew 4.8 percent.

A weaker yen is usually a boon for Japanese exporters, stimulating production and boosting profits earned overseas when repatriated.

"But supply chain disruptions in China as well as some rare materials crunches, including palladium, have prevented manufacturers from producing goods and exports remained sluggish," said Kazuma Kishikawa, an economist at the Daiwa Institute of Research.

Ideas:

Supply chain disruptions are probably going to be cause challenges for the time being and companies in all supply chains need to maybe re-think about they do business as a way to make sure that what has happened during pandemic related to supply chains don't happen again.

There is no easy answer to fixing the supply chain challenege now and they might not be fixed or solved for a while as the global economy is fluctuating between trying to get back to some kind of normal or a new normal and the continued challenges with the Ukraine and Russia situation.

But this could be the new normal, meaning there is not going to any real kind of stability or any real calm in the future and businesses and supply chains have to learn to work through all of the challenges they are going to face.

Article:

Both exports to and imports from China, Japan's largest trading partner, declined, apparently impacted by the Chinese government's radical "zero-COVID" restrictions and a lockdown in Shanghai that started in late March.

Japan's exports to China dropped 5.9 percent, the largest decline since March 2020, led by a decrease in shipments of semiconductor manufacturing equipment and vehicles.

Imports from China shrank for the first time in 15 months, falling 5.5 percent and marking the biggest decline since September 2020, due to fewer purchases of communication devices, as well as oil and apparel products.

Ideas:

The China situation is not only effecting Japan but its major challenge globally too as China is the major manufacturing base for many companies, or used to be, and at the same time, a majore supply chain base for many companies.

Unfortunately the Chinese policy situation might get some companies to think that maybe they need to change to another country such as the up and coming situation in Vietnam which is on the minds of many companies now.

If the China situation doesn't change soon, it might be enough for companies to consider other countries to conduct operations instead of waiting for China to get back to some kind of normal.

Of course Hong Kong and the surrounding Chinese cities are in the same situation now and some companies might already be thinking how to get to a more normal area, if possible.

Article:

Japan's exports to the United States grew 17.6 percent, lifted by robust car shipments. Imports climbed 15.3 percent, led by LNG and liquefied petroleum gas.

Japan's exports to Russia dropped 69.3 percent as the government imposed trade restrictions following Moscow's invasion of Ukraine. Imports from Russia in value terms jumped 67.3 percent on the back of higher energy prices, although the volume of shipments such as crude oil and coal fell.

Ideas:

Exports to the US might be good and continue to be good, but the weak yen is going to continue to increaes prices for US consumers. So there is always the chance the higher car prices might begin to have an effect on US consumers.

A weak yen also means a strong dollar and US comsumers now have to deal with price increases related to many different products or service.

So in effect because of inflation it might be a crowding out effect meaning some consumers might not have enough for all the things they might want buy and when supermarket prices, gas prices, and other things keep going up that new Toyota, Nissan, or Honda they want to buy might be put on the waiting list until inflation decreases.

Fortunately, Russia is probably not a major export partner for Japanese companies and as such they are not going to lose that much because of the trade restrictions. 

Article:

Looking ahead, Kishikawa said Japan's goods trade deficit is expected to continue as the rise in material prices is unlikely to abate.

"If Shanghai's lockdown ends in June as the vice mayor has said, crude oil prices may be pushed higher," Kishikawa added.

All figures were compiled on a customs-cleared basis.

Ideas:

The trade deficit will continue as long as the yen continues to decrease along the combination of global energy prices continue to increase. And then add in raw material prices which all combine to make the trade deficit enough worse.

Even if the Shanghai lockdown ends it might take some time for manufacturing and shipping to get back to any kind of normalcy as the ship-yards probably have a backlog of products the need to get out of China, and like in the US and LA last summer/fall there might be many ships just sitting outside Shanghai just wainting to unload and or pickup products to be shipped.

Crude oil price can go up because of the demand for oil now as factories get back to work and shipping docks now getting back to some kind of normalcy.

Have a nice day and be safe!