By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — Shares of Japanese shippers clawed back lost ground Monday, as investors and analysts weighed the impact of the country’s recent disasters on upcoming freight negotiations and as some foreign shipping companies continued to assess the radiation risks at ports around Tokyo Bay.
Downside risks for shippers include a strong yen and higher fuel prices, as well as the still-uncertain effect supply-chain interruptions will have on cargo demand after the earthquake and subsequent tsunami that struck the northeast coast of Japan on March 11, said Deutsche Bank AG analyst Seigo Ando.
Tsunami survivors return to villages
Residents return to tsunami-ravaged areas of Japan to salvage belongings as many fear their communities will become ghost towns. Video courtesy of Reuters.
Radiation fears were also grabbing headlines, after the operator of the earthquake-damaged Fukushima Daiichi nuclear plant — Tokyo Electric Power Co., or Tepco /zigman2/quotes/202771076/delayed JP:9501 -0.67% /zigman2/quotes/204529331/composite TKECF 0.00% — said over the weekend that radioactive material in seawater near the plant continued to rise. Read more on radiation in seawater near Fukushima nuclear plant.
“The radiation effect on the ship itself is very, very small,” in proportion to the concerns centered around it, “but there is a serious problem with the global supply chain, and now is a very important time, with the negotiation of [freight] terms from next April,” Ando said Monday.
“I thought the freight rate from Asia to Europe would start to decrease from next autumn, but the timing might be earlier than I expected,” he said.
“I hear from some negotiators [that] it’s getting tougher and tougher for container operators to negotiate with their clients,” Ando said. “We have to wait for another few weeks to see the result of the negotiations, but maybe we have to expect it will be bad news” for the container companies.
On Monday, shares of Nippon Yusen K. K. /zigman2/quotes/203488100/delayed JP:9101 +2.30% /zigman2/quotes/201056741/composite NYUKF +33.81% ended up 0.3% after being down more than 1.0% in afternoon trading. Shares of Mitsui O.S.K. Lines Ltd. /zigman2/quotes/204152844/delayed JP:9104 +1.00% /zigman2/quotes/210406910/composite MSLOF -3.86% finished up 0.4%, and Kawasaki Kisen Kaisha Ltd. /zigman2/quotes/201857679/delayed JP:9107 -0.56% shares were down 0.3%, paring an earlier loss of nearly 2.0% in afternoon trading.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.12% , which was down more than 1% earlier, ended down 0.6%, while the broader Topix reversed its losses and eked out a 0.1% gain.
In broader regional trading Monday, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.85% slipped 0.4% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.0034% lost 0.2%.
South Korea’s Kospi gained 0.1% and China’s Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +0.21% was up 0.2%.
More than a third of Japan’s foreign-container cargo passes through the ports of Tokyo and Yokohama. Tokyo is about 140 miles south of the Fukushima power plant.
China is reportedly still checking ships arriving from Japan for radiation, after quarantining a Japanese vessel last week.
Southeastern China’s Xiamen port is free of radioactive contamination after the entry of a Japanese ship vessel belonging to Mitsui O.S.K. was found to have elevated levels of radiation, China’s state-controlled Xinhua reported Saturday, citing a local quality and inspection office.
Elevated levels of radiation were detected on the deck, as well as on the outside surfaces of some of the containers on the ship, the report cited the Xiamen Entry-Exit Inspection and Quarantine Bureau bureau as saying.
China detected radiation worth 3.5 microsieverts per hour in a second test on Saturday, Dow Jones reported, citing a Mitsui spokeswoman. A chest X-ray typically exposes the patient to a radiation dose of around 100 microsieverts, according to the Radiological Society of North America.