Reconstruction in Japan following this month's earthquake and tsunami is likely to boost prices for lumber, plywood, steel and other building materials, a leading Canadian bank said Monday.
Scotiabank said in a research note that commodity prices were like to see an increase over the next six to 12 months as Japan recovers from this month's earthquake and tsunami, and continues to grapple with the crisis at the Fukushima-Daiichi nuclear plant.
Some shift from nuclear energy to imported liquid natural gas (LNG) in Japan and to natural gas-fired power generation in the United States and parts of Europe will also likely occur, it said.
In the near-term, Japan is turning to imported LNG and crude oil to offset the loss of electricity from the shutdown of nuclear power generation.
"Perhaps the more lasting impact of the incident at the Fukushima-Daiichi nuclear power plant… will be to trigger a re-examination of nuclear safety procedures and reactor technologies around the world and to slow the development of nuclear power," opined Patricia Mohr, a vice president and commodity market specialist at Scotiabank.
However, countries such as China, Indian, South Korea and Russia — major growth markets for nuclear energy — "will almost certainly move ahead with significant nuclear expansion," she added.
"Not to do so would enormously raise the cost of fossil fuels for consumers worldwide in the coming decade and limit the containment of greenhouse gas emissions.
"Overall, the Fukushima-Daiichi event will likely delay rather than derail the nuclear renaissance," Mohr concluded.
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