PurchasingB2B

Commodities in demand after Japan disaster

The earthquake and tsunami that hit Japan took a toll on some commodity prices in mid-March, according to Scotiabank. But the bank also predicts those effects won’t last as the country rebuilds.


April 25, 2011
by Michael Power

PURCHASINGB2B MAGAZINE: MARCH/APRIL 2011

The earthquake and tsunami that hit Japan took a toll on some commodity prices in mid-March, according to Scotiabank. But the bank also predicts those effects won’t last as the country rebuilds.

Scotia Economics released the Scotiabank Commodity Price Index March 28, which rose by 1.1 percent in February—the eighth consecutive monthly gain—to 49 percent above the April 2009 cyclical low.

In the near-term, Japan is turning to imported LNG and crude oil to offset the loss of shutdown nuclear capacity, said Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank. Given the light damage to LNG import terminals, Japan has already arranged increased LNG imports for April. As well, Japanese orders for Canadian lumber and forest products are picking up, says Mohr.

Demand for corn—along with commodities used for building—has increased following the crisis, said Rod Sherkin of Propurchaser.com.

“There’s a general tightening and anticipation of increases in construction and food commodities,” he said. “People aren’t really sure how it’s all going to play out—but it’s certainly having the effect of increasing demand to some extent.”