Ground Still Shaking as Aftershock Severity Decreases - Japan Earthquake Update May 10, 2011

The following is part of a series of email updates about the effects of the earthquake in Japan. The emails originated from a colleague in Tokyo and provide an insiders perspective. These posting have been unedited and tell the story from one person's vantage point

May 10, 2011

The overall situation is gradually improving. My next report will not be until early June around the 3-month anniversary of the main temblor.

Total aftershocks over the past 2 weeks are as follows:

Lunchtime 25th April to 2nd May – 208 Lunchtime 2nd May to 9th May – 216

North East Report
The status of the NE area has shown some improvement over the past 2 weeks, but still has a long way to go in the worst hit areas.

• Toll of dead and missing has improved somewhat to around the 25,000 level, with confirmations still arriving that in excess of 90% of victims were indeed victims of the Tsunami (i.e. drowning) and not of the Earthquake itself.
• Estimates of the time it will take to clean up the debris field are now ranging between 2 and 3 years, this suggests the rebuilding boom may be a bit more delayed than originally anticipated
• The number of people still in temporary shelters has dropped to around 120,000, however rapid falls are not expected yet due to the slow pace of establishing temporary housing units.
• Very large numbers of volunteers descended on the worst hit areas over the “Golden Week” holiday period last week to assist with the cleanup efforts.
• Plenty of focus, daily news reports etc, still on the nuclear reactor in Fukushima, refer “Nuclear Situation” below.

Tokyo Report
Tokyo is best described as having achieved “business as normal”, i.e. as normal as possible under the circumstances

Main remaining problem for the non-tsunami areas is achieving regular levels of factory production, refer business perspective below.

Blackouts & Brownouts
These have been discontinued for the time being, but reinstatement is widely anticipated over the hottest of the coming summer months, i.e. July and August.

Nuclear Situation
This remains front page, as well as 2nd and 3rd page, news on a daily basis here locally, even if it is not the focus of the international foreign press any more.

Progress continues, but still at a slow pace, they have now reached the stage where workers are inside the No 1 Reactor repairing the damaged cooling system. Achievement of this would enable rapid attainment of “cold shutdown” status. Nonetheless, high radiation levels inside the reactor continue being detected, so progress on repairs is not likely to be so rapid.

Remotely controlled equipment now in frequent and widespread use

Government has now introduced a “legally binding 20km exclusion zone” nonetheless is permitting some to visit their residences for up to 2 hours to collect valuables etc. All are being given protective clothing and screened for radiation upon return. Refer graphic below for levels of radiation in Eastern Japan as of Monday 9th May. Second graphic depicts the evacuation zones in more detail.

Newspaper Articles
An article came out 2 days ago detailing how the Power Company will need assistance from the government to pay all the damages it is liable for. Seems the government is going to assist, however the price will be nationalization of the company. Apparently this reactor also was built very close to a known fault line.

Locals were to be accorded a voice in discussions about reopening the second nuclear plant in Fukushima, i.e. the one that was shutdown without any radiation leakage, seems that it is only some 10km south of the problem plant.

Another article late last week came out detailing that over 40% of hospitals equipped to deal with radiation sickness & problems were “overly close” to nuclear plants in general.

Prime minister requested that another nuclear plant South of Tokyo be shutdown due to some safety concerns, the (separate) power company which operates this plant is going to acquiesce to the government’s request. This power plant however is run by the power company which services the Nagoya area where the likes of Toyota & Suzuki manufacturing facilities. This shutdown is actually quite a serious development and does not bode well for Blackouts and Brownouts over summer.

Aftershocks and Seismic Data
Caution is still required as there have been 424 in total since my last report 14 days ago however the outstanding feature of these was that they were almost exclusively smaller in size and therefore hopefully a reliable sign everything is indeed settling down

• Lunchtime 25th April to 02nd May – 208
• Lunchtime 02nd May to 09th May – 216

Saw another article this morning highlighting the ongoing plight of several towns and villages up north which are now suffering daily floods at high-tide due to the fact the local land level has dropped by up to 1.2 meters (this also happened in Chile in their big earthquake in the 1960’s by the way).

• Large number of aftershocks are centered in the Fukushima area (i.e. near the problem reactor site)
• The Intensity of the median level is now 4.8, a significant fall from the median level of 5.4 in from 2 weeks earlier, maybe this will prove to be a more effective method to judge the level and direction of seismic activity, We will find out soon enough.

Business Perspective

• Economic Impact
  Forecasts are gradually being revised downwards for the March and June quarters, but being revised upwards after that due to the reconstruction efforts that will commence as previously reported.
  
  However, some are beginning to wonder if reconstruction efforts will, or even can, begin that quickly as other estimates are appearing that it will take up to 3 years to clear the debris field.
  
  The major economic impact remains in the Agricultural sector, which does nor bode well for food prices this summer.
• Factory Closings
  Number of closings now seems to have stopped, however the number of factories unable to resume full production shows no dramatic sign of improvement just yet.
  
  All carmakers in particular seem to have been hit quite hard by this problem, but the degree varies from one to the other.
  
  A negative effect on overseas supply chains is still being reported, but the extent, particularly to non-Japanese entities is difficult to gauge from here.
  
  This matter still warrants further monitoring.
• Economic Recession Likelihood is unchanged
  For the current QTR, this is unchanged and considered almost a certainty but only at marginally negative growth levels, for the next QTR it is also considered quite likely with the magnitude dependent on how quickly the problems associated with the JIT system in b) above can be remedied.
  
  Subsequently the growth positive effects of rebuilding are supposed to kick-in, but that timing may prove optimistic.
• Financial Markets
  Would think the Securities analyst’s are all busy revising forecasts and valuations (downwards) for all local public companies.
  
  Funding of reconstruction efforts – Discussion still underway for a special additional budget and to increase the Consumption Tax rate to fund reconstruction, nothing concrete decided yet however.
  
  BOJ still under pressure to commit to buying “Reconstruction Bonds” from the government, but the BOJ head is still resisting pressure to do so.