North Korea Tension Exposes Key Artery of Commodity Trade

North Korea is an ant in the world of raw materials, as years of sanctions have more or less isolated it from international markets. But it‘s an ant surrounded by elephants. China takes more than half the world‘s soybean shipments. Japan is the world‘s largest importer of liquefied natural gas. South Korea is among the biggest buyers of coal and sellers of steel. The three countries combined import about one-third of the world‘s seaborne crude oil.

Commodity shippers are intently watching North Korea‘s missile tests and Trump‘s rhetoric to see if the tensions escalate into activity that could disrupt commodity flows into those countries. While it remains a war of words for now, an intensification could lead to higher insurance rates for vessels, exclusion zones or port disruptions, which may increase transport costs and force route changes, according to shipping analysts, academics and industry consultants.