MOSCOW (MRC) -- Japan's industrial production grew by 5.4% year on year in November, supported by higher output of motor vehicles and plastic products, said The Financial Times.
Japanese industrial output jumped in November by the largest margin since 2013, providing hope that the country’s automotive sector could finally be moving beyond its semiconductor supply struggles. Industrial production increased 7.2 per cent last month compared with October, significantly exceeding economists’ forecasts. The improvement was driven by a 43.1 per cent month-on-month resurgence in car production, said analysts, who noted that other manufacturers appeared to be rebuilding exhausted inventories more rapidly than expected.
Takuji Aida, chief economist at Okasan Securities, said that while overseas parts procurement was stagnant, it appeared that supply chain problems that have afflicted Japanese manufacturers were gradually being resolved. The monthly data released by the Ministry of Economy, Trade and Industry represent Japan’s last major economic release of the calendar year. The November increases followed October’s more modest 1.8 per cent gain from the previous month.
The government also issued an upward revision of its overall assessment of industrial production, saying the manufacturing sector was “showing signs of recovery” after having previously rated the situation as “at a standstill”. Analysts at Goldman Sachs, who had forecast a 4.8 per cent increase, noted that the production index had recovered to just below its pre-pandemic level in January 2020.
“While monthly production will likely fluctuate amid lingering supply shortages for semiconductors and other components, it appears to be returning steadily to a solid growth track,” wrote Yuriko Tanaka, a Goldman Sachs economist, in a note to clients.
Investors reacted positively to the data, with the benchmark Topix closing up 1.37 per cent higher on Tuesday. But while some interpreted the numbers as a potential leading indicator of more sustained gains during the final quarter of the financial year ending in March 2022, others were more guarded.
As per MRC, Japanese refineries may be forced to shut down capacity once again unless they see a strong recovery from the coronavirus pandemic. They’ve been hit by declining use for fuel at home, competition from newer refineries in China and South Korea dominating in other markets, as well.
As MRC wrote before, JXTG Nippon Oil and Energy is in plans to restart its cracker following an unplanned outage. The company is likely to resume operations at the cracker early this week. The cracker was shut owing to technical issues on May 4, 2020. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 460,000 mt/year and propylene production capacity of 235,000 mt/year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.