Much as we resist thinking about them in these terms, natural disasters create winners as well as losers. Before Mar. 11, for example, Korean steelmakers were struggling. Shares of Posco (PKX), the world's third-largest steel producer, tumbled 21 percent in 2010 as raw-material prices soared. The outlook for 2011—with Chinese growth weakening—was no better. Korea was the also-ran of East Asian steel, posting a 10 percent market share, vs. Japan's 30 percent.
Now, with the prospect of less competition from its hobbled neighbor and increased demand when the Japanese start rebuilding, business looks better for the Koreans. Posco's share price jumped 10 percent in ten days of trading after the earthquake; Hyundai Steel, Korea's No. 2 producer after Posco, was up 11 percent.
Many of Japan's toughest commercial rivals are Korean, and the Mar. 11 disaster created opportunities for them. Power outages, transportation bottlenecks, and other manufacturing problems are likely to continue for "at least another six to nine months," says Susumu Kato, chief economist in Tokyo with Credit Agricole CIB and CLSA. "This is not short-term." That's one reason investors are turning to Korean companies such as oil refiner SK innovation (up 11 percent since Mar. 10), Honam Petrochemical (up 9 percent), and Ssangyong Cement Industrial (up 25 percent). Korean companies still depend on Japanese suppliers, but the Japanese share of the Asian supply chain has been shrinking for two decades, says Matt Robinson, an economist in Sydney with Moody's Analytics (MCO). The current crisis, he adds, is "likely to exacerbate the trend."
Korea is home to the world's six largest shipyards, which were in good shape even before Mar. 11. Since 2000 the nation's shipbuilders have churned out 90 percent of the world's liquefied natural gas tankers. In January the Korean government forecast a 75 percent increase in global orders for LNG tankers and predicted that the six Korean shipyards would see a 33 percent increase in orders for all ships this year. A Fukushima-inspired backlash against nuclear power would boost use of LNG—and the shipyards. There aren't enough tankers to handle the demand, says Lee Sokje of Mirae Asset Securities in Seoul. Mar. 11 will be "a landmark event for the shipbuilding industry."
The picture is more muddled for Korea's two largest automakers, Hyundai Motor and Kia Motors. Since they buy most of their parts in Korea, they won't suffer supply shortages, says Darius Lam, an analyst in Bangkok with J.D. Power and Associates. They may "sell a few more cars," he says, but he doubts consumers will switch in large numbers. Satish Lele, a vice-president for industrial technologies at Frost & Sullivan, agrees. "Consumers still have a preference for Japanese brands over Koreans," he says. "I don't think that will change over a two- or three-month period."
The bottom line: While Korean steelmakers and shipbuilders are likely to pick up market share from the Japanese, carmakers may not be so fortunate.