Japan Earthquake Caused Impact on China's Non-ferrous Metal Industry Pressured Exports

As a major consumer of rare and non-ferrous metals, Japan’s earthquake has given rare earth-based rare metals markets and non-ferrous metals markets such as aluminum, copper, lead, and zinc to bring about pessimism.

On March 15th, Lin Donglu, secretary general of the Chinese Society of Rare Earths, told reporters that Japan is the largest importer of rare earths. Such an earthquake will affect the downstream industries of rare earths and will lead to a reduction in the demand for rare earths in Japan in the short term. In addition, non-ferrous metals such as copper, aluminum, lead and zinc, especially China's export of aluminum electrode foil to Japan, will also be affected.

The pressure of rare earths is among rare metals, and Japan imports most of them from China.

According to statistics of the General Administration of Customs, in 2010, China's rare earth oxide products exported to Japan accounted for about 43% of total exports, which did not include the rare earths smuggled into Japan.
At present, Japan has the largest consumption of rare earths in the fields of glass and ceramics (polishing powders and glass catalysts), mainly functional ceramics, such as multilayer ceramic capacitors, optical amplifiers and optical isolators for optical fiber communications, and microwave communications. Microwave ferrites, ferrules that connect optical fibers, and other new materials.

Although, Japan's rare earth imports channels are still open. The reporter learned from the China Institute of Rare Earths that Japan’s rare earth import bay is mainly located on the southwest coast of Japan and is less affected by the earthquake. However, the suspension of production of multiple semiconductor factories in the disaster-stricken areas such as Toshiba, Sony, Fujitsu, and Canon has already exposed China’s rare earths to export pressure.

Minmetals Minzhou Rare Earth Company revealed that the earthquake has affected a small amount of rare earth exports, but due to the interlocking of Japanese industrial chains, the more real impact on the rare earth industry remains to be seen. Baotou Rare Earth also told reporters that it is currently paying close attention to the impact of the earthquake on the rare earth industry.


Earlier, there were rumors that Japan imported large quantities of rare earths from China to the seabed. After the earthquake, some market participants suspected that Japan's rare earth reserves were damaged. However, Chen Zhanheng, director of the academic department of the China Rare Earth Society, and senior engineer, said that rumors that Japan stores rare earths on the sea floor are unfounded because most of the rare earth elements are easily oxidized and there is no technical support for storing the seabed.


In addition to rare earths, the impact of the earthquake in Japan on other rare metals has also become apparent. For example, indium, a rare metal that had been rising rapidly before, experienced a rapid decline in prices after the earthquake.

Indium is a soft silver-gray metal with a yield of only 1% of silver and is widely used in high-tech fields such as computers, solar cells, electronics, optoelectronics, and modern information industries. Among them, the liquid crystal display is currently the main application field of indium in Japan. China is the world’s largest indium producer and exporter, accounting for more than 30% of the world’s total indium production. Japan is the world’s largest indium consumer country. Indium demand accounts for more than 70% of the world’s annual indium production. Imported from China.

Zhuzhou Smelter Group is one of the largest metal indium producers in China and Japan is its main export target. An analyst who followed the Zhuzhou Smelter Group told reporters that although most of the customers of the Zhuzhou Metallurgical Group are located in the southwest of Japan, these customers are mostly middlemen in the industry chain, and Japan’s autos, semiconductors, and household electrical appliances industry are damaged and bound to spread upstream. Supply of Raw Materials, which is also the main reason for the short-term decline in indium prices.


Color is not spared not only rare metals, but exports of other metal products have also been affected.

Japan's consumption of non-ferrous metals is mainly reflected in the manufacturing industry. The earthquake occurred in its second most important industrial zone, while the non-ferrous metal downstream industries such as automotive, electronics, and chemical industries suffered the most.


Among them, the earthquake has the most direct impact on the export of aluminum electrode foil in China. The area affected by the earthquake (Fukushima and the surrounding area) is one of the major concentrations of aluminum electrolytic capacitor manufacturers in Japan, and the nuclear-irradiated factories will even be sealed for a long time.


According to China Merchants Securities, the earthquake may have a profound impact on the industrial layout of Japanese aluminum electrolytic capacitors. Since the 1980s, Japan’s manufacturing industry has begun to shift overseas. After the earthquake caused the plant to stop production, Japanese aluminum capacitor manufacturers may accelerate the construction of overseas bases.

Guoxin Securities non-ferrous industry analysts told reporters that this transfer trend may be beneficial to China, especially those with technological advantages and industrial chain advantages, can take this investment by Japanese companies to further expand market share.


Dongyang Aluminum, the largest aluminum electrode foil producer in China, told reporters that the company has maintained close cooperation with Japan and will hopefully become a beneficiary of Japan’s industrial transfer.

However, in the short term, Japan’s demand for aluminum will decline. According to Chinalco's statistics, Japan is a net importer of aluminum. In 2010, Japan's aluminum consumption was 2.154 million tons, accounting for 5.25% of global demand.


Non-ferrous industry analysts of China Merchants Securities and Guosen Securities all stated that the suspension of production of aluminum electrolytic capacitors and automobile plants will have a greater impact on aluminum consumption in the short term, as 30% of aluminum demand is used in the automotive industry. At present, the Japanese auto industry suffered the most serious losses. Japan's three major auto makers Toyota, Honda and Nissan have closed a total of 22 factories and aluminum price pressure has been formed.

In terms of copper, the earthquake caused the closure of two major copper smelters in Japan, accounting for almost one-third of Japan’s copper production.

At present, the earthquake in Japan has affected the copper industry in Chile. The Chilean government has issued evacuation notices to all flood-stricken coastal areas in the country to avoid possible tsunami-related casualties caused by the earthquake in Japan, which will affect the exports of Chilean copper. . Chilean copper ore traders have also quickly made adjustments to the export routes of copper mines and will transfer copper products exported to Japan to China.

In addition, Japan is still the world’s major demand for tin and nickel, and the earthquake will also have a negative impact on the demand for nickel and tin in the short term. However, Dongyang Aluminum Executive Office told reporters that the post-disaster reconstruction in Japan will stimulate non-ferrous metal consumption.