Japan’s October chemical exports fall 7.9% on weakening global demand

SINGAPORE (ICIS)–Japan’s chemical shipments abroad in October fell by 7.9% year on year to yen (Y) 957bn ($6.3bn), weighing on overall exports, whose growth slowed amid tepid external demand.

The contraction in chemicals shipments for the month was primarily due to the 13% year-on-year drop in exports of medical products, data from the Ministry of Finance (MOF) showed on Thursday.

Exports of organic chemicals, however, rose by 1.9% year on year to Y186.1bn in October while shipments of plastic materials were up by 1.7% at Y274.3bn.

By volume, exports of plastic materials rose by 5.3% year on year to 474,621 tonnes.

Exports of motor vehicles jumped by 35.4% year on year, while those of textile yarns and fabrics inched up by 0.1%.

Japan’s overall October exports rose by 1.6% year on year to Y9.15tr, slower than the 4.3% expansion recorded in September, while imports were down by 12.5% at Y9.81tr.

The resulting trade deficit of Y663bn was a reversal of the Y62bn surplus in September, but narrower than the October 2022 deficit of Y2.21tr.

Japan’s exports to China, its largest trading partner, fell by 4.0% year on year, marking the 11th straight month of contraction.

Shipments to the US were up by 8.4% year on year in October while those to ASEAN were down by 8.7%.

TRADE SLOWDOWN HIGHLIGHTS FRAGILE ECONOMIC RECOVERY
Japan, which is the world’s third-biggest economy, shrank at a bigger-than-expected annualized rate of 2.1% in the third quarter, based on preliminary government data.

Most Asian economies are export-oriented that the current climate of weak external demand is weighing heavily on their growth prospects.

In the second quarter, Japan’s year-on-year GDP growth was lowered to 4.5% from a previous estimate of 4.8%.

“Japan’s manufacturing and external-oriented service sectors remained challenged and at the same time, the risks of a persistently weaker yen and costlier energy commodities could re-balloon Japan’s import bill, and that in turn will hurt net exports and subtract growth from GDP,” said Alvin Liew, senior economist at UOB Global Economics & Markets Research.

After having been the key growth driver in the second quarter, net exports of goods and services disappointed in July September as imports rebounded strongly due to a higher energy import bill compounded by a weaker yen, Liew noted.

Japan’s manufacturing sector has been in contraction for the most part of the year, as indicated by its monthly purchasing manager’s index (PMI) amid weak exports.

Focus article by Nurluqman Suratman

Thumbnail image: Containers stacked at Aomi Container Terminal in Tokyo, Japan, 19 October 2023. (By KIMIMASA MAYAMA/EPA-EFE/Shutterstock)