Japan’s industrial production fell 0.5% in March, missing the +1.1% forecast, as Hormuz-linked disruptions cut chemical and fuel output.
Japan’s industrial production fell 0.5% in March, missing the +1.1% forecast, as Hormuz-linked disruptions cut chemical and fuel output. Manufacturers see a further decline in April before a 2.2% rebound in May.
Summary: Japan’s industrial production fell 0.5% month-on-month in March on a preliminary basis, missing the consensus forecast of +1.1% and extending February’s -2.0% decline for a second consecutive monthly contraction On a year-on-year basis, output rose 2.3%, compared with a prior reading of +0.4% The Ministry of Economy, Trade and Industry attributed the monthly decline primarily to weakness in petroleum-based chemicals, with polyethylene output down 27% and polypropylene falling 15% in March Domestic fuel production was also broadly lower, with gasoline output down 7.3% and diesel declining 14.3%, reflecting supply chain disruption from the effective closure of the Strait of Hormuz Japan sources approximately 95% of its crude oil from the Middle East, the vast majority of which is typically routed through Hormuz METI noted that Japan holds 1.8 months of inventory for intermediate chemical products, which has so far allowed downstream shipments to remain largely intact Manufacturers surveyed by METI expect output to fall a further 0.7% on an adjusted basis in April before rebounding 2.2% in May, suggesting the industrial trough has not yet been reached The data adds to pressure on an economy already contending with a weak yen, elevated import costs and limited Bank of Japan policy flexibility Japan’s industrial production contracted for a second consecutive month in March, falling 0.5% from February against a market consensus of +1.1% growth, as the effective closure of the Strait of Hormuz disrupted the supply of crude oil and petrochemical feedstocks to one of the world’s most energy-dependent major economies. Preliminary data from the Ministry of Economy, Trade and Industry showed the decline was concentrated in petroleum-derived products….