According to a report released by provider of global financial and economic intelligence Global Insight, the unexpected earthquake and tsunami disaster that hit Japan will definitely cause a big pause in the country ''s economic growth and might have an impact on its other trading partners as well.
However, many experts believe that Japan will be able to recover very soon. Credit Suisse quoted Japan''s ability to recover from the Kobe earthquake/tsunami in 1995. Following that tragedy, Japan''s iron and steel shipments dropped by 5-10 percent from January to February 1995. However, the shipments rebounded strongly in March 1995, before virtually returning to normal for the remainder of the year.
According to the report, it is expected that steel mills in Japan, after the resumption of operations, will start to build up stocks in anticipation of the country''s rebuilding needs. There might even be an increase in steel exports from Japan in the coming months after the resumption of operations, as mills wait for the country to begin its rebuilding process.
Japan in normal times is not a big steel importer. However, due to the large scale rebuilding needs and the fact that some domestic mills would take time to recommence operations, there could be a temporary surge of steel imports into the country, the report suggested. In the medium term, domestic steel mills will have to increase their capacity utilization to serve the new domestic demand. In the meantime, steel mills in countries which have the capability to produce quality steel such as China might be able to take over some of the market share from the Japanese steel mills. However, Chinese steel mills should be aware of the strict Japanese quality codes which could make it difficult for them to penetrate the market.