MNI: BOJ Feb Real Export Index Bounces After China New Year

--BOJ Sees Exports To China Rebounding in March, But Level Low

--BOJ Sees Exports to U.S., Europe to Remain Weak

By Hiroshi Inoue

     TOKYO (MNI) - Japan's real export index rose in February, boosted mainly by

the Chinese New Year distortion and the Bank of Japan remains vigilant against

the outlook for exports.

     The BOJ's own real export index rose 4.2% m/m in February, coming after a

4.6% fall in January and 2.0% gain in December.

     History shows that the real export index has often rebounded in February

after the index fell on the back of a late January Chinese New Year. BOJ

officials expect Japan's Chinese exports to move toward a recovery trend in or

after March, as China recovers from the virus outbreak, but they expect them to

stay at low levels for a while. Production in China is gradually recovering

after hitting bottom in early February, the BOJ views.

     --EX-CHINA WEAK

     Meanwhile, Japan's exports to the U.S. and Europe are expected to remain

weak in the coming months as the spread of the coronavirus hits their economies.

As a result, BOJ officials expect the export index to remain weak for the time

being but they maintain the view that global demand will recover gradually as

the coronavirus wanes, although it remains uncertain when that will be.

     Exports fell for a 15th straight month in February, down 1.0% y/y,

improving from the 2.6% drop in January. Imports fell 14.0%, recording a 10th

straight decline following the 3.5% fall in January. Overall, Japan saw a trade

surplus of JPY1.1098 trillion, recording a first surplus in four months

following a deficit of Y1.313 trillion in January.

     Latest data showed a continued pick-up in global demand for IT-related

goods, although demand for capital goods remained weak, while demand for auto

and auto parts remained weak in the U.S. and Europe.

     --SEMI-CONDUCTOR STRENGTH

     Exports of semiconductors rose 23.2% y/y, up for a fourth straight month

following a 1.4% gain in January. Auto exports fell 4.0% following a 4.7% fall

in January, while auto part exports fell 3.6% vs a 4.2% decline previously.

     Shipments of automobiles to the U.S., which account for about 40% of total

Japanese auto exports, fell 9.2% in February, improving from a 18.5% fall in

January.  Those to the European Union, with a 12 % share of total Japanese auto

exports, fell 13.8% in February, improving from a 15.8% fall in January.

     Machinery shipments continued falling in February, down 8.8% after falling

9.5% in January, indicating overseas firms remained cautious about implementing

capital investment.

     Overall exports to China fell 0.4% y/y in February, improving from a 6.4%

y/y fall in January but imports from China plunged 47.1%, hit by the disrupted

supply chains.

     The BOJ at an extraordinary policy-setting meeting on Monday lowered its

assessment of exports, saying, "Exports declined." The previous assessment was

"Exports have continued to show some weakness."

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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