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Hyundai Securities: Korea Firms May Gain From Quake

Sunday, 13 Mar 2011 07:56 PM

South Korean chemical makers, refiners, automakers and steelmills may benefit from production disruptions at rivals in Japan after the strongest earthquake on record in the neighboring nation, said Hyundai Securities Co.

Supplies of petrochemical products will become tighter, including paraxylene, of which Japan exports about 2.5 million tons a year, benefiting South Korean producers, Hyundai analysts led by Lee Sang Won wrote in a report today. Carmakers such as Hyundai Motor Co. and Kia Motors Corp. may profit because it will take time for Japanese companies to secure parts and recover overseas shipments, they said.

Companies including JX Nippon Oil & Energy Corp. and Cosmo Oil Co. by Friday had shut down more than 820,000 barrels a day of capacity, or about 19 percent of the country’s total processing ability. Sumitomo Metal Industries Ltd, Japan’s third largest steelmaker, said operations at blast furnaces at its Kashima steel plant near Tokyo were suspended. Nissan Motor Co., the second-largest Japanese carmaker, said 2,300 new vehicles were damaged.

“Supply disruptions by Japanese companies seem inevitable, and demand for Korean-made products may increase,” the Hyundai analysts said. “We believe the earthquake will be slightly positive to Korean equities.”

Steel prices may strengthen, driven by production losses at Japanese steelmills and an increase in demand for reconstruction and repair works in Japan, helping Korean manufacturers and steelmakers such as Posco, Hyundai Securities said.

Companies that may be hurt by the earthquake include Hotel Shilla Co., a hotel duty-free shops operator, and Grand Korea Leisure Co., a casino operator, that both count Japanese travelers as key clients, Hyundai Securities said.

Japan was struck by its strongest earthquake on record, an 8.9-magnitude temblor that shook buildings across Tokyo and unleashed a seven-meter-high tsunami that engulfed towns on the northern coast.

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South Korean chemical makers, refiners, automakers and steelmills may benefit from production disruptions at rivals in Japan after the strongest earthquake on record in the neighboring nation, said Hyundai Securities Co.Supplies of petrochemical products will become...
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