JAPAN DISASTER: Crude, shares plummet as nuclear threat continues

15 March 2011 17:45  [Source: ICIS news]

By Franco Capaldo

LONDON (ICIS)--Oil prices fell steeply on Tuesday while shares in global markets plummeted as Japan continues to tackle the ongoing nuclear crisis following the devastating earthquake and tsunami which hit on 11 March.

Crude prices fell by more than $5/bbl to take April Brent on ICE Futures below $108/bbl as fresh explosions at the Fukushima Daiichi nuclear power plant, on the east coast of Japan, deepened concerns among investors about the impact on the country’s oil demand and economic growth.

By 11:50 GMT, April Brent crude had hit a low of $107.88/bbl, a loss of $5.79/bbl from Monday’s close of $113.67/bbl. However, it recovered slightly later in the day to reach $110.82/bbl.

Heightened fears of widespread radiation contamination also caused Japanese shares to plummet, dragging down other bourses in Asia. The Nikkei 225 index fell by as much as 14.5% to 8,227.63 points, before settling at 8,605.15, down 1,015.34 points or 10.55% from Monday’s close, with the Japanese central bank continuing to provide liquidity to calm the markets.

The Shanghai SE Composite index in China fell by 1.41% from Monday’s close to 2,896.26 points, while the Hang Seng index in Hong Kong settled at 22,678.25 points, down 2.86% from Monday’s close. The Mumbai Sensex in India went down by 1.47% to settle at 18,167.64 from the previous close.

The Japanese central bank offered to inject yen (Y) 8,000bn ($98.2bn) into the banking system on Tuesday, following a record Y15,000bn offered in same-day money market operations on Monday, according to media reports.

However, the bank's efforts did little to stop shares continuing to fall in the Western markets. At 16:21 GMT, the FTSE 100 in the UK was down by 1.34% from the previous close, or 77.29 points, to 5,697.95 points, while the DAX index in Germany had fallen 3.10% from the previous close to 6,653.51 points

In early trading in the US, the Dow Jones Industrial Average was down 159.31 points, or 1.33% from the previous close, to 11,833.85 points.

Meanwhile, some Japanese petrochemical companies are pulling staff out of offices and halting production.

Sumitomo Chemical was planning to evacuate its Tokyo-based office staff by Tuesday evening, a source said, while specialty chemical company LANXESS announced that it had temporarily closed its Japanese headquarters in the country's capital due to fears over staff safety.

Japan’s Nippon Nyukazai halted production at its recently started 30,000 tonne/year butyl glycol ether (BGE) plant in Kashima, Ibaraki prefecture, while Asahi Glass Co (AGC) has shut its propylene oxide (PO), monopropylene glycol (MPG) and polyether polyols plants in Kashima.

In addition, JX Nippon Oil & Energy, the world's largest paraxylene (PX) exporter, has declared a force majeure on supply of PX at three of its facilities.

According to media reports, the latest official death toll from the quake and tsunami is more than 3,000, but thousands are still unaccounted for and it is estimated that more than 10,000 have been killed.

Additional reporting by Neha Popat, Pearl Bantillo, Nurluqman Suratman, Felicia Loo, Chow Bee Lin, Saru Thukral, Ong Sheau Ling

($1 = €0.72, $1 = Y81.49)

By: Franco Capaldo
+44 (0)20 8652 3214

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