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Complicated supply chains cloud effect on US chems

March 18/2011

(ICIS) -- Complicated supply chains and the vagaries of energy policy cloud the effects that the multiple Japanese disasters will have on the US chemicals industry, an economist said on Thursday. A massive 9.0-magnitude earthquake and tsunami hit Japan on Friday. The disasters damaged the cooling systems at several nuclear reactors at the Fukishima-Daiichi complex.

The damage led to explosions and fires at the reactors, and workers are still struggling to avert a major nuclear disaster. However, the crisis in Japan may have little direct effect on chemical trade with the US because the volume is relatively small, said Kevin Swift, chief economist for the American Chemistry Council (ACC).

The US chemical industry is expected to have revenues of more than USD 720bn (EUR 518bn) in 2010, Swift said.

By contrast, US chemical exports to Japan were only USD 10bn in 2010, he said. That accounted for just 3% of Japanese consumption.

In fact, Japan's chemical industry mainly serves its manufacturing customers, Swift said. "The Japanese chemical industry is relatively balanced."

Out of all the US exports to Japan, about 40% are basic industrial chemicals, Swift said. Another 13% are downstream products such as resins, rubber and fibres. Pharmaceuticals make up 32%, he said. Agricultural chemicals, specialties, consumer products and other chemicals make up the rest. The indirect effects of the Japanese earthquake and tsunami are harder to measure, Swift said. For example, Germany is shutting down seven of its 17 nuclear plants for a safety review.

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