Japan Chemical Trading Blog

The latest chemical trading industry insights from Japan, Asia and the world, reported by the President of Daishin Corporation, Masa Oguchi.

Japan’s Housing Loan Interest Rates Hit a Record Low

Happy New Year!
I hope that 2015 will be a good year for the readers of this weblog.
While there is no Christmas holiday in Japan, there is some time off during the New Year’s season, and for this year the calendar was good: many companies had nine consecutive holidays (December 27th to January 4th). Yesterday was the first business day of the new year.

According to the Nikkei Newspaper on December 31st, the housing loan interest rates of three Japanese megabanks (ten-year fixed rate) hit a record low of 0.9 to 1.2 percent.
A friend who recently bought a house says the rate fell to about 0.5 to 0.6 percent at the Internet-based Sony Bank.
It reflects the Japanese trend of not taking risks to borrow money.
As of today, the interest rate of the 10-year government bonds hit a record low of 0.285 percent; however, with such low levels for this vital lending rate, the banks’ management, also, looks difficult.

Japan’s Housing Loan Interest Rates Hit a Record Low

Happy New Year!
I hope that 2015 will be a good year for the readers of this weblog.
While there is no Christmas holiday in Japan, there is some time off during the New Year’s season, and for this year the calendar was good: many companies had nine consecutive holidays (December 27th to January 4th). Yesterday was the first business day of the new year.

According to the Nikkei Newspaper on December 31st, the housing loan interest rates of three Japanese megabanks (ten-year fixed rate) hit a record low of 0.9 to 1.2 percent.
A friend who recently bought a house says the rate fell to about 0.5 to 0.6 percent at the Internet-based Sony Bank.
It reflects the Japanese trend of not taking risks to borrow money.
As of today, the interest rate of the 10-year government bonds hit a record low of 0.285 percent; however, with such low levels for this vital lending rate, the banks’ management, also, looks difficult.

Butter Shortage

It may be surprising to our readers from outside Japan, but recently, the whole of Japan has faced a butter shortage.
If you go to a supermarket in Japan, you often find butter is out of stock, or it is sold at a price considerably higher than before.

There are several direct reasons that led to this problem: the decrease in the number of dairy farmers due to the aging of dairy farmers and the lack of successors because it is difficult to secure profits in the dairy business, and the reduction of raw milk production due to last summer’s fierce heat that affected the health of dairy cattle in Hokkaido, i.e., the rampant of mastitis and the decrease in the number of pregnant cows caused by this disease.

However, it seems that the butter shortage will be alleviated soon because the Ministry of Agriculture, Forestry and Fisheries of Japan urgently imported 7,000 tons of butter in May 2014, and sold it to dairy manufacturers by the end of November.
Thus, the Christmas season butter demand is expected to be covered. Putting aside the discussion on the pros and cons for import regulations imposed on dairy products for the purpose of protection of national dairy farmers, the Ministry of Agriculture, Forestry and Fisheries, whose policy allowed the butter shortage problem to grow until it was actualized in the consumer market, should reflect upon the consequences.

In Japan, an administrative agency under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries exclusively imports butter.

Butter Shortage

It may be surprising to our readers from outside Japan, but recently, the whole of Japan has faced a butter shortage.
If you go to a supermarket in Japan, you often find butter is out of stock, or it is sold at a price considerably higher than before.

There are several direct reasons that led to this problem: the decrease in the number of dairy farmers due to the aging of dairy farmers and the lack of successors because it is difficult to secure profits in the dairy business, and the reduction of raw milk production due to last summer’s fierce heat that affected the health of dairy cattle in Hokkaido, i.e., the rampant of mastitis and the decrease in the number of pregnant cows caused by this disease.

However, it seems that the butter shortage will be alleviated soon because the Ministry of Agriculture, Forestry and Fisheries of Japan urgently imported 7,000 tons of butter in May 2014, and sold it to dairy manufacturers by the end of November.
Thus, the Christmas season butter demand is expected to be covered. Putting aside the discussion on the pros and cons for import regulations imposed on dairy products for the purpose of protection of national dairy farmers, the Ministry of Agriculture, Forestry and Fisheries, whose policy allowed the butter shortage problem to grow until it was actualized in the consumer market, should reflect upon the consequences.

In Japan, an administrative agency under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries exclusively imports butter.

Japan’s Trade Deficit Expected to Be Reduced in 2015

On December 4, the Japan Foreign Trade Council, comprising Japanese trading companies, announced its forecast for Japan’s trade deficit for fiscal 2015 to be about 10.5 trillion Japanese yen (approx. USD a hundred and five billion).
This is a slight improvement against the forecast for fiscal 2014, which was about 11.7 trillion Japanese yen.
Yet the trading balance is in a permanent deficit trend, with 7 trillion Japanese yen for fiscal 2012 and 11.5 trillion Japanese yen for fiscal 2013.

The suspension of nuclear power generation has led to increased imports of mineral fuels (coal, oil and LNG). However, the observed increase is just 3-4 trillion Japanese yen, and it can be said that the Japanese trade deficit is a structural change.

In this respect, Japan seems to be following the path of the former British Empire, or that of the current USA. Being scarce in natural resources and having the world’s worst government debt compared to GDP ratio, this is an issue that cannot be ignored.
It is important to abolish unnecessary regulations and to attract direct foreign investments to Japan. Nevertheless, as an export company, we think it is ideal if more excellent products that are able to enrich the lives of people around the world are developed in Japan, and by delivering them outside Japan, will increase exports from Japan.

Japan’s Trade Deficit Expected to Be Reduced in 2015

On December 4, the Japan Foreign Trade Council, comprising Japanese trading companies, announced its forecast for Japan’s trade deficit for fiscal 2015 to be about 10.5 trillion Japanese yen (approx. USD a hundred and five billion).
This is a slight improvement against the forecast for fiscal 2014, which was about 11.7 trillion Japanese yen.
Yet the trading balance is in a permanent deficit trend, with 7 trillion Japanese yen for fiscal 2012 and 11.5 trillion Japanese yen for fiscal 2013.

The suspension of nuclear power generation has led to increased imports of mineral fuels (coal, oil and LNG). However, the observed increase is just 3-4 trillion Japanese yen, and it can be said that the Japanese trade deficit is a structural change.

In this respect, Japan seems to be following the path of the former British Empire, or that of the current USA. Being scarce in natural resources and having the world’s worst government debt compared to GDP ratio, this is an issue that cannot be ignored.
It is important to abolish unnecessary regulations and to attract direct foreign investments to Japan. Nevertheless, as an export company, we think it is ideal if more excellent products that are able to enrich the lives of people around the world are developed in Japan, and by delivering them outside Japan, will increase exports from Japan.

Moody Downgraded the Japanese Government Bonds

On December 1, The American credit rating company, Moody’s, announced the downgrade of the credit rating for Japanese government bonds by one level, from Aa3 to A1, considering that Japan’s financial reconstruction has become even more difficult due to Japan’s negative economic growth in the July-September period that marked negative growth for two successive quarters, and Abe Cabinet postponing the second consumption tax increase.

On the following day, on December 2nd, it cut its ratings of five Japanese banks and two life insurance companies (Nissay and Sony Life) that hold large amounts of Japanese government bonds.

With these events, the rating of Japanese government bonds becomes one level lower than China, South Korea and Saudi Arabia, and on the same level as the Czech Republic and Estonia.

Of course. I think that leaving debt to the future generation is a cowardly act.

Moody Downgraded the Japanese Government Bonds

On December 1, The American credit rating company, Moody’s, announced the downgrade of the credit rating for Japanese government bonds by one level, from Aa3 to A1, considering that Japan’s financial reconstruction has become even more difficult due to Japan’s negative economic growth in the July-September period that marked negative growth for two successive quarters, and Abe Cabinet postponing the second consumption tax increase.

On the following day, on December 2nd, it cut its ratings of five Japanese banks and two life insurance companies (Nissay and Sony Life) that hold large amounts of Japanese government bonds.

With these events, the rating of Japanese government bonds becomes one level lower than China, South Korea and Saudi Arabia, and on the same level as the Czech Republic and Estonia.

Of course. I think that leaving debt to the future generation is a cowardly act.

Car Sales in Japan Marking 4-month Consecutive Drop

According to the website of the Japan Automobile Dealers Association, the number of new car sales (the number of newly registered automobiles) in October was about 400,000 units, nearly a 6% drop year-on-year, marking a 4-month consecutive drop since July.
Last minute demand prior to the consumption tax increase in April this year is still having an impact.
I expect the year-on-year decreases will continue for some time in the future.

In order to sell many more cars in Japan’s rapidly aging society, it will be necessary to propose a car with a totally different concept, instead of gradually improving an existing model.
Such a new car might become popular in countries with similar issues including European countries.
Japanese car manufacturers, work a miracle again.

Car Sales in Japan Marking 4-month Consecutive Drop

According to the website of the Japan Automobile Dealers Association, the number of new car sales (the number of newly registered automobiles) in October was about 400,000 units, nearly a 6% drop year-on-year, marking a 4-month consecutive drop since July.
Last minute demand prior to the consumption tax increase in April this year is still having an impact.
I expect the year-on-year decreases will continue for some time in the future.

In order to sell many more cars in Japan’s rapidly aging society, it will be necessary to propose a car with a totally different concept, instead of gradually improving an existing model.
Such a new car might become popular in countries with similar issues including European countries.
Japanese car manufacturers, work a miracle again.

Maglev Train Construction to Start in December

On November 27, JR Tokai announced they are going to start construction for the maglev train on December 17.

Scheduled to begin operations in 2027, the maglev train will connect Tokyo and Nagoya (285km) in approximately 40 minutes at the fastest using new technology that utilizes superconducting magnetic levitation.
By 2045, the company hopes to extend the line to Osaka, connecting Tokyo and Osaka in 67 minutes.

I currently live in Osaka, and spend around 2 and a half hours going to Tokyo on business trips.
I would appreciate it if I could get to Tokyo in a little more than 1 hour.
However, the operation will start 31 years from now. I hope to have retired by then.

Maglev Train Construction to Start in December

On November 27, JR Tokai announced they are going to start construction for the maglev train on December 17.

Scheduled to begin operations in 2027, the maglev train will connect Tokyo and Nagoya (285km) in approximately 40 minutes at the fastest using new technology that utilizes superconducting magnetic levitation.
By 2045, the company hopes to extend the line to Osaka, connecting Tokyo and Osaka in 67 minutes.

I currently live in Osaka, and spend around 2 and a half hours going to Tokyo on business trips.
I would appreciate it if I could get to Tokyo in a little more than 1 hour.
However, the operation will start 31 years from now. I hope to have retired by then.

Yen’s Depreciation Leading Japan’s Export Recovery Trend

According to the October trade statistics bulletins announced by the Ministry of Finance on 20 November, Japan’s trade balance deficit was 710 billion Japanese yen (approx. USD seven billion one hundred million).
This is 250 billion Japanese yen (approx. USD two billion five hundred million) less than the previous month and 390 billion Japanese yen (approx. USD three billion nine hundred million) less year-on-year, respectively.

The export of automobiles, electronic devices, chemical products and steel increased by about 10%, while imports increased by only 2.7% year-on-year, affected by the crude oil price depreciation, etc.

Recently, in a conversation with a representative of a shipping line company, I heard that all tonnage for ships leaving from Japan to Singapore was already booked until December.
At last, the effect of the yen’s depreciation is starting to show.

Yen’s Depreciation Leading Japan’s Export Recovery Trend

According to the October trade statistics bulletins announced by the Ministry of Finance on 20 November, Japan’s trade balance deficit was 710 billion Japanese yen (approx. USD seven billion one hundred million).
This is 250 billion Japanese yen (approx. USD two billion five hundred million) less than the previous month and 390 billion Japanese yen (approx. USD three billion nine hundred million) less year-on-year, respectively.

The export of automobiles, electronic devices, chemical products and steel increased by about 10%, while imports increased by only 2.7% year-on-year, affected by the crude oil price depreciation, etc.

Recently, in a conversation with a representative of a shipping line company, I heard that all tonnage for ships leaving from Japan to Singapore was already booked until December.
At last, the effect of the yen’s depreciation is starting to show.

Prime Minister Abe Dissolved the House of Representatives and Called a General Election

A new election!

It seems difficult to bring down the Liberal Democratic Party led by Prime Minister Abe on the issue of postponing the second consumption tax increase.

However, as was repeatedly mentioned in this weblog, the profligate binge of public spending will eventually lead to inflation.

An inflation rate of 2 percent per year, the aim of Prime Minister Abe is, indeed, ideal, but my concern is the risk of hyperinflation.

 

 

Prime Minister Abe Dissolved the House of Representatives and Called a General Election

A new election!

It seems difficult to bring down the Liberal Democratic Party led by Prime Minister Abe on the issue of postponing the second consumption tax increase.

However, as was repeatedly mentioned in this weblog, the profligate binge of public spending will eventually lead to inflation.

An inflation rate of 2 percent per year, the aim of Prime Minister Abe is, indeed, ideal, but my concern is the risk of hyperinflation.

 

 

Further Consumption Tax Increase to 10% May Be Postponed

The Nikkei Newspaper published an article today under the banner headline “Consumption Tax Increase to 10% May Be Postponed”.
The consumption tax rate was increased from 5% to 8% in April 2014, and the rate was scheduled to be further increased to 10% in October 2015.
However, according to the article, Prime Minister Abe reportedly stated that he was “basically moving toward putting off” raising the tax from 8% to 10% and would decide as soon as the start of next week.

This disappointed me.
It is obvious that in order to repay the Japanese government debt that has grown to a massive amount, the government must increase the consumption tax rate as well as reconsider its profligate binge of public spending.
How can a family last for a long time if a husband earns only 50,000 dollars a year while his wife spends 100,000 dollars. We need more income and less waste!

Further Consumption Tax Increase to 10% May Be Postponed

The Nikkei Newspaper published an article today under the banner headline “Consumption Tax Increase to 10% May Be Postponed”.
The consumption tax rate was increased from 5% to 8% in April 2014, and the rate was scheduled to be further increased to 10% in October 2015.
However, according to the article, Prime Minister Abe reportedly stated that he was “basically moving toward putting off” raising the tax from 8% to 10% and would decide as soon as the start of next week.

This disappointed me.
It is obvious that in order to repay the Japanese government debt that has grown to a massive amount, the government must increase the consumption tax rate as well as reconsider its profligate binge of public spending.
How can a family last for a long time if a husband earns only 50,000 dollars a year while his wife spends 100,000 dollars. We need more income and less waste!

Kuroda Bazooka and Japanese Economy

It’s been two weeks since the Bank of Japan offered its surprise QQE2 ‘bazooka’ prompted by the bank’s governor, Kuroda.
During this period, the dollar-yen exchange rate saw the Japanese yen depreciate against the dollar by 6 Japanese yen, and the Nikkei stock average has been up by over 1,500 Japanese yen.
In addition, the U.S. Dow average has been up by over 400 USD.

So far, the situation calls for a celebration.
Behind this background lies the sluggish domestic economy that has failed to improve following the consumption tax rise implemented in April, and this ‘bazooka’ may have an element of functioning as ‘cover fire’ for Abenomics.

Although it may seem to have some effect at the moment, I don’t feel like fully supporting this political measure as I’m unsure about where it is heading.
Governor Kuroda must be feeling the same way.

The lady owner of a bar in Kitashinchi where I went yesterday for the first time in a long while told me she saw an increase in the number of customers in November compared to October.

Kuroda Bazooka and Japanese Economy

It’s been two weeks since the Bank of Japan offered its surprise QQE2 ‘bazooka’ prompted by the bank’s governor, Kuroda.
During this period, the dollar-yen exchange rate saw the Japanese yen depreciate against the dollar by 6 Japanese yen, and the Nikkei stock average has been up by over 1,500 Japanese yen.
In addition, the U.S. Dow average has been up by over 400 USD.

So far, the situation calls for a celebration.
Behind this background lies the sluggish domestic economy that has failed to improve following the consumption tax rise implemented in April, and this ‘bazooka’ may have an element of functioning as ‘cover fire’ for Abenomics.

Although it may seem to have some effect at the moment, I don’t feel like fully supporting this political measure as I’m unsure about where it is heading.
Governor Kuroda must be feeling the same way.

The lady owner of a bar in Kitashinchi where I went yesterday for the first time in a long while told me she saw an increase in the number of customers in November compared to October.