Catastrophe in Japan: Impact on rubber demand will be minimal

Auto-tyre companies having plants in the country's northeast have confirmed that there is no damage to their plant buildings or facilities. A few plants which have to be shut down, due to power supply stoppage and safety concerns, will resume production on restoration of electricity supply.

Japan accounts for 7 % of the global demand for natural rubber. The closure of a handful of auto-tyre plants in the country's northeast region for a few days can not impact on the commodity's global demand in a significant way, says ANRPC. If at all there is any marginal impact, it will be for a short-term only, says the association.

Bridgestone Corporation has reported that all its five plants in the northeast Japan are unaffected although production has to be stopped due to power supply problems and on safety considerations. Plants can be reopened on restoration of power supply and completion of safety verification. Production has already been partly resumed in one of the five plants closed.Toyo Tire & Rubber Co. Ltd. confirmed that buildings or facilities in any of its plants in the region have not been damaged although a plant has been temporarily shut down due to power outage.

No damage has been reported for Sumitomo Rubber Industries Ltd., Yokohama Rubber Co. Ltd. and Michelin which are the three other auto-tyre manufacturing companies running plants in Japan.

ANRPC says the disaster is unlikely to have a noticeable impact on global economy as Japan has not been a driver of the global recovery from the economic meltdown in 2008. Moreover, the tsunami-hit region is far from Japan's economic hub which is the area from Tokyo South to Osaka. Although the country's economic and manufacturing activities may be affected in the short-term, rebuilding activities could help revive the economy in the medium term.