SHANGHAI, Mar. 21 (SMM) -- Japan is the world’s third largest copper producer and two large-scale copper smelters in Japan were forced to halt operations due to power supply disruptions, but SMM does not believe the loss of output at these two copper smelters will have any appreciable effect on copper output.
The short-term impact on lead, zinc, and aluminum was mainly from production stoppages at automobile manufacturers in Japan, but this impact should be minimal. Automobile industry analysts from Guosen Securities believe that since Japanese automobile production capacity is spreading out across the world, Japanese auto makers can easily shift production capacity. In addition, most production facilities at automobile plants in Japan have not been damaged directly and will resume operations gradually following the restoration of power and transportation infrastructure. Japanese aluminum consumption accounts for only 5% of global aluminum consumption, so SMM believes the earthquake in Japan will not have any substantial effect on global aluminum consumption.
The long-term impact from the earthquake remains unknown given the complex industrial supply chain in Japan. SMM believes the earthquake will affect the Japanese economy in the short-term, but any medium-to-long-term effect will be minimal since Japan's post-disaster recovery process will be extremely rapid and will boost demand for base metals.
SMM believes the earthquake in Japan will have a negative effect on China’s exports of aluminum semis to Japan, but any effects are limited at present. Japan is one of the world’s most advanced automobile and electronics producers, with many core technologies practiced at manufacturers located in Japan. In this context, if power supplies and the nuclear crisis in Japan continue to deteriorate, the effect on the entire industrial chain cannot be ignored.
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