Yesterday’s Wall Street Journal reported that Japan slipped into recession in the quarter running from April to June. A few factoids the article references include: Japan is the second largest economy in the world and that the dip was the largest in seven years with exports falling 2.3% due to declining American and European orders as well as slowing Asian orders. Whereas our own blog coverage and that of major news publications tends to be skewed toward China, the impact of a Japanese recession has large ramifications for the global economy. And it tells us a little about the health of the US economy.
Consider this just in terms of US imports: Japan supplies 5% of the US steel market and its steel exports (Japan) actually grew 5.6% from a month ago. In terms of total steel imports, the US has taken in 9.5% less volume then it did a year ago from Japan, 853,000 short tons this year compared to 942,000 short tons a year ago according to the American Institute of International Steel.
MetalMiner has conducted its own analysis of Japan as a trading partner for metals related products. Based on ITC (International Trade Commission) 2007 data, in terms of all metal products, Japan is America’s 7th largest source of supply. From a steel perspective, it is America’s 3rd largest supplier after Canada and Mexico. So is the one month increase of Japanese purchases significant? It’s probably too early to tell but since purchases from Canada and Mexico were down in June, perhaps it’s time to take a look at Japan as a supply source.