Japan is bracing itself for a nuclear meltdown after another explosion occurred at a nuclear power plant, triggered by the worst earthquake in the country’s history.
The damage bill of the disaster is expected to reach $US100 billion, while more than 500,000 people are thought to be homeless and 10,000 killed.
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One of the hardest hit regions, Sendai, is a major rice growing region and also plays host to several chip and auto manufacturers, prompting fears gadget makers and the consumer electronic industry will suffer from the disaster.
Nomura economists predict annual profits for auto manufacturers Toyota, Honda and Nissan could be hit by between 3% and 8% this year, with Toyota and Nissan already halting production.
Australian consumers have already been told to prepare for short-term rises to car prices and household appliances, in addition to insurance premium hikes.
Australian companies are struggling to come to grips with the disaster, with Austrade chief economist Tim Harcourt saying it’s still too early to assess the economic and trade impact.
Harcourt says about 3,300 Australian businesses export to Japan, with trade ties worth about $59 billion each year, making it Australia’s second-largest trading partner after China.
Australian embassy officials have confirmed the safety of more than 2,200 Australians in Japan registered with the embassy, but are still searching for more than 800 Australians yet to make contact.
Harcourt says given the huge scale of the human tragedy, the Australian Government is currently focusing its efforts on the humanitarian effort.
As major food and energy exporters, Harcourt says Australian companies will play an important role in the country’s reconstruction.
Meanwhile, sharemarkets across the world have tumbled, with the benchmark Nikkei index falling by 5% this morning, while Wall Street and European markets fell overnight as news of the disaster spread.
Demand for Australia’s key exports to Japan – namely coal, iron ore and liquefied natural gas – is set to rise in the wake of the disaster, with prices to benefit from pressure on supply.
Analysts are widely tipping the LNG sector to receive the biggest lift from the disaster, as Japan may increase gas-fired power stations following the explosions at the Fukushima nuclear plant.
Australia’s coal sector is also set to benefit, with demand for thermal coal likely to increase in the short-term and coking coal in the long-term, when the reconstruction effort commences.