April 11, 2011
Here is an update on the situation in Japan which I originally compiled as of lunchtime Monday 11th April 2011.
However, following yet another major aftershock (7.1 Richter Scale) late in the afternoon on the 11th, which was pretty much right at the problem reactor site by the way, the tectonic situation has changed dramatically with approx. 85 additional aftershocks over the past 20 hours alone, with another major one this morning at 8.15 (of strength 6.3) but with an epicenter very close to Tokyo in Chiba. Refer “Aftershock and Seismic” section below for details.
Over the past week, mother nature delivered 2 reminders to keep us focused on tectonics as well as remind us of the need to keep moving forward.
- The first of 3 very large aftershocks on Thursday evening around 11.30 pm served to keep us all focused on the (still existing) tectonic problems at hand. The second and third ones occurred at 5.16pm on Monday and 8.15 am on Tuesday with a dramatic pick-up in overall frequency.
- The cherry blossom season is now in full swing in and around Tokyo reminding all that life goes on. It was not being celebrated with the usual merriment, as earthquake reminders abound, but was celebrated extensively nonetheless.
The status of the NE area has shown some improvement over the past week, but still has a long way to go in the worst hit areas.
- Toll of dead (13,000) and missing (14,000) has actually fallen back from an earlier total of approx. of 30,000, but in excess of 150,000 still in temporary shelters in the worst affected regions.
- Emergency housing has just started to become available (by lottery), but a great deal more needed.
- 12,000 SDF & US military personnel now searching in earnest all over the worst affected areas including some within the 20km restricted zone.
- Convenience store chains report that number of stores still closed has dropped dramatically from 40% (of some 3400) to about 6.0% now.
- Much of the focus still on the nuclear reactor in Fukushima, refer “Nuclear Situation” below.
Tokyo Report
In regard to getting back to normal, Tokyo has almost arrived at the stage where is can be considered “business as usual”.
Food supplies are almost back to normal, with even less empty spaces on store shelves than last week. Supplies of bottled mineral water (2.0 liter PET bottles) starting to become available once again, but supplies are very limited.
Main remaining problem for the non-tsunami areas is achieving regular factory production, refer business perspective below.
Blackouts - Continue
These blackouts continue, but are scheduled for termination in the next week or 2. They may be reinstated over the summer months however.
Nuclear Situation
Progress with closing down the remaining 3 reactors continues at a snails pace as one problem after another arises to slow efforts. Main focus is now the radioactive water that has been released into the ocean and other water slated for storage, therefore the situation is still far from resolved and vigilance is still required.
Government is mulling the introduction of a “legally binding exclusion zone” around the reactor, not that there isn’t one at the present time of course, but seems the present one is voluntary and a number of residents have been returning to their homes to collect belongings etc.
Aftershocks and Seismic Data
Caution is still required as there have been 98 in total since my last report 7 days ago including one very big aftershock last week, as per the data below. To this I must add the additional 84 or so (in dark blue font below) since 11.14 Monday morning to 9.15am today.
Looks like this week’s total is going to be way above last week’s of 98, therefore it is still too early to conclude everything is “settling down to normal levels”.
Intensity maps of the 3 major aftershocks on Thursday evening, Monday afternoon and this morning are as follows:
Thursday Evening
Note : The epicenter is not very far from the reactor location in Fukushima, which caused some concerns about additional reactor damage.
Monday afternoon – 17.16pm – Epicenter was also pretty much right at the reactor site in Fukushima, and at least briefly, cut power to the plant.
Tuesday Morning 8.12am – Not as strong as above 2 shocks, but much closer to Tokyo, so was felt at about the same intensity.
Business Perspective
- North-East Area – Economic Impact
Share of Japan GDP which the worst hit areas account for is being estimated to be around 6.0%, not all of which will be lost due to the quake and tsunami’s, however the situation in regard to b) below is still worsening. - Factory Closings
- Number of closings now slowing down, however the number of factories unable to resume full production continues to grow, e.g. Toyota which is aiming to resume production at all facilities this week, only it cannot do so at more than 50% capacity levels.
- There is no reason to conclude any other major (or not) domestic manufacturers are any better off then Toyota.
- A negative effect on overseas supply chains is also now being reported.
- This matter warrants further monitoring as the full effect of the disruptions may not yet be fully played out.
- 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 should gradually become more evident from around the September quarter and serve as a base for subsequent rebounds in GDP.
- Financial Markets
- Would think the Securities analyst’s are all busy revising forecasts and valuations (downwards) for all local public companies.
- It still remains to be seen whether the BOJ will actually print money to fund reconstruction efforts, the Governor is refusing to do so and many others think it is not necessary anyway as there is still plenty of domestic savings to tap into to. The pressure to do so is coming from some political quarters, ostensibly for nation economic benefit, which very few financial market participants find very credible.
- March 31 Fiscal Year End
- Has passed without any major lingering problems, and should be considered another sign that all is gradually getting back to normal.
This discussion is over, recommendations were provided in the last update.
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