Scotiabank report analyses Japan’s impact on commodities

A new report from Scotiabank says the negative fallout from Japan’s earthquake and tsunami are “likely to prove temporary with Japan quickly gearing up its economy again.”

Patricia Mohr, the bank’s vice president economics and a commodity market specialist said reconstruction in Japan will boost demand and prices for steel and metals over the next six to twelve months.

“Perhaps the most lasting impact of the incident at the Fukushima-Daiichi nuclear power plant, a 40-year-old facility with some outdated technology, will be to trigger a re-examination of nuclear safety procedures and reactor technologies around the world and to slow the development of nuclear power,” she wrote.

Currently Japan is importing liquefied natural gas (LNG) and crude oil from Qatar and Brunei, among other countries, to offset the loss of nuclear power, she continued.

Mohr also noted that China, India, South Korea and Russia will move ahead with their plans (from before the nuclear disaster) to add 105.2 GWe of nuclear power — or about 66% of the world total. “Not to do so would enormously raise the cost of fossil fuels (oil, LNG, and steam coal) for consumers worldwide in the coming decade and limit the containment of greenhouse gas emissions,” she explained. “Overall, the Fukushima-Daiichi event will likely delay rather than derail the nuclear renaissance.”