–Exports Hit Fresh Record High on Reopening Demand, Rising Costs
–Imports Mark 4th Straight Month of Record High amid High Oil and Gas Prices
–In 1H 2022, Exports, Imports Reach All-Time Highs, Trade Deficit Largest
By Max Sato
(MaceNews) – Solid reopening demand for mineral fuels, iron and steel, and semiconductors led Japanese export values to a record high in June while shipments to China marked the first rise in three months after a two-month Covid lockdown of the key port city of Shanghai was lifted at the end of May, data released Thursday by the Ministry of Finance showed.
But export volumes marked the fourth straight year-on-year decline amid uncertainty over whether aggressive interest rate hikes by some central banks can ease inflationary pressures without causing a recession.
Oil and gas prices remain high, boosting imports to a fresh record high in June and resulting in the 11th consecutive trade deficit. The depreciation of the yen is adding to rising import costs.
The key points from the MOF’s Trade Statistics:
* Export values, reflecting higher prices, jumped 19.4% in June to a record high Y8.63 trillion, surpassing the previous high of Y8.46 trillion hit in March. It was the 16th straight year-on-year rise after increases of 15.8% in May and 12.5% in April. The pace of growth was faster than the median forecast of an 18.0% gain. However, export volumes fell for the fourth month in a row, down 1.4% after falling 3.5% in May.
* “The record high in export values reflects rising product prices and transportation costs,” a MOF official told Mace News. “We cannot judge from the trade statistics whether the decline in export volumes is due to slower demand overseas or domestic reasons, such as slower production and shipments of automobiles caused by parts shortages.”
* The increase was led by strong demand for mineral fuels, iron and steel, and electronic parts (semiconductors), as seen in the previous month. Exports of semiconductor-producing equipment to the European Union continued surging while demand for semiconductors led shipments to Asia.
* Shipments of automobiles rose 0.4% (down 10.1% in volumes) on the year in June, as the industry continues to deal with parts shortages and logistics bottlenecks. It followed a 7.9% drop in May, a 4.8% rise in April and a 5.2% fall in March. Auto exports to the US, the key market, dipped 0.7% (down 17.5% in volumes) after falling 15.6% in May, rising 10.9% in April and slipping 16.7% in March.
* On a seasonally adjusted basis, exports rose 4.0% in June from the previous month after rising 2.4% in May. The Bank of Japan’s real export index rebounded 3.0% on the month in May after slumping 6.0% in April and rising 0.6% in March but the April-May average dipped 3.8% on the first quarter, when the index rose 2.3%. The BOJ will release its real trade indexes for June at 1400 JST (0500 GMT/0100 EDT) Thursday.
* Import values, also reflecting higher prices, soared 46.1% on the year to Y10.12 trillion in June, hitting an all-time high for the fourth consecutive month and rising from Y9.64 trillion in May. It was the 17th straight increase after a 48.9% jump the previous month, but coming in lower than the median forecast for a 48.0% rise. The increase was led by higher prices for crude oil, coal and natural gas as well as the need to import more Covid vaccines from Europe. Import volumes posted the second straight rise, up 3.6%, after rising 4.7% in May.
* The trade balance came to a deficit of Y1.38 trillion in June. It marked the 11th straight month of a shortfall after a deficit of a revised Y2.39 trillion the previous month and compared to a surplus of Y369.4 billion in June 2021. The gap was narrower than the consensus call of a Y1.57 trillion deficit.
* In the first six months of 2022, Japanese exports rose 15.2% to Y45.94 trillion, the highest figure for calendar first-half and second-half periods under the current trade data formula dating to 1979. Imports surged 37.9% in the January-June period to Y53.86 trillion, also a record high. The trade balance was a deficit of Y7.92 trillion, the largest shortfall for any calendar first half or second half.
* Exports to China, the top export destination for Japan, posted the first rise in three months, up 8.3% from a year earlier in June, after edging down 0.2% in May, falling 5.9% in April, rising 2.9% in March and surging 25.8% in February. The 5.4% decrease in January was the first drop in 19 months and was due to slower shipments before the Lunar New year holidays. The increase in June was led by shipments of semiconductors, audio and visual equipment and mineral fuels. Exports of automobiles declined.
* Japanese exports to Asia as whole marked the 16th straight year-on-year rise, up 19.1%, after increases of 17.5% in May and 10.3% in April. The increase was led by demand for semiconductors and other electronic parts, iron and steel as well as mineral fuels, as seen in May.
* Exports to the U.S., another key market, recorded the ninth straight year-on-year rise, up 15.7% in June, after rising 13.6% in May and 17.6% in April. The increase was led by drugs, mineral fuels and iron and steel.
* Shipments to the European Union posted the 16th straight year-on-year increase, up 22.1% on year after gaining 10.5% in May and 19.2% in April. Demand for chip-making equipment as well as iron and steel remained strong and the increase was also led by automobiles.