Japan Trade Deficit: Ideas Later.

Japan logs 378.6 billion yen trade deficit in May, 1st red ink in 4 months

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TOKYO (Kyodo) -- Japan logged a trade deficit in May of 378.6 billion yen ($2.4 billion), its first red ink in four months, government data showed Wednesday, with a preliminary report revealing imports of crude oil plunged over 57 percent by volume amid the Middle East conflict.

The Finance Ministry data underscored progress in the government's efforts to procure fuel from alternative sources, including the United States, but at a higher cost due to added transportation and insurance fees.

Japan purchased crude oil at a record-high price of 114,076 yen per kiloliter, up 67.2 percent from a year earlier, and at $114.6 per barrel, 52.0 percent higher, the data showed, with a ministry official saying the "high" levels likely reflected the change in shipping routes.

It is feared the increased procurement costs for oil will hurt corporate profits and prompt price hikes for consumer goods that use oil-derived materials, analysts said.

The deficit in May shrank 42.8 percent from the year before.

Exports rose 17.0 percent to 9.51 trillion yen on shipments of China-bound semiconductors and U.S.-bound cars, while imports climbed 12.5 percent from a year earlier to 9.89 trillion yen due to purchases of smartphones from China, the report said.

With the Iran conflict disrupting transportation through the Strait of Hormuz, Japan's oil imports dived 57.3 percent to 4.73 million kl, led by a 61.9 percent drop from the Middle East alone, the data showed. The resource-scarce country relied on the region for over 90 percent of its oil imports before the war.

By value, oil imports fell 28.5 percent to 539.2 billion yen, with shipments from the Middle East decreasing 37.3 percent to 445.8 billion yen.

The report showed that Japan's efforts to tap alternative suppliers partially paid off, with crude oil imports from the United States increasing 24.0 percent to 576,000 kl and sourcing from Malaysia and Brunei also progressing, the official said.

Prime Minister Sanae Takaichi said earlier this month that Japan expects to secure the same volume of crude oil imports in July as the year before, after ramping up purchases from non-Middle Eastern suppliers like the United States.

The preliminary data also highlighted continued interruptions in the distribution of oil-related products, most notably naphtha, a raw ingredient of chemicals used in the manufacture of plastics and packaging materials, due to the Middle East conflict.

Japan's total imports of petroleum spirits, of which the bulk is naphtha, from the Middle East fell 90.0 percent to 136,000 kl, the data showed.

The drop was partly offset by supplies from the United States, with the report showing Japan's purchases of 566,000 kl, up 569.6 percent from a year earlier.

The official said it remains uncertain how the recent agreement between the United States and Iran on ending their war will impact Japan's trade with the Middle East.

But it is promising that companies such as automakers continue to view the region as a valuable market despite the conflict, the official said, citing media reports.

Article source: https://mainichi.jp/english/articles/20260617/p2g/00m/0bu/015000c