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Shares of major Japanese chemical manufacturers declined sharply on Thursday after China announced the launch of an anti-dumping investigation into imports of dichlorosilane, a critical material used in semiconductor and integrated circuit manufacturing. The move heightened investor concerns over rising geopolitical and trade tensions between Japan and China, weighing on the broader Japanese stock market.
Shin-Etsu Chemical Co., Ltd., one of Japan’s largest and most influential chemical companies, saw its shares drop 3.4%, leading losses across the sector. Mitsubishi Chemical Holdings Corp fell 0.4%, while Mitsui Chemicals, Inc. declined 1.3%. Both Shin-Etsu and Mitsubishi Chemical were specifically mentioned in China’s probe, adding to pressure on their stock prices. Investors reacted cautiously amid fears that the investigation could disrupt exports and negatively impact earnings for Japanese chemical producers with exposure to the Chinese market.
The decline in chemical stocks also contributed to broader market weakness, with the Nikkei 225 index falling around 1%. Market sentiment was further dampened by concerns that diplomatic relations between Tokyo and Beijing could worsen in the coming months, potentially affecting trade and investment flows.
China’s Ministry of Commerce stated that the anti-dumping probe was initiated following complaints from domestic producers of dichlorosilane. According to the ministry, Chinese manufacturers claimed that a surge in Japanese imports and lower prices had caused material harm to local industry. The investigation adds another layer of uncertainty to the global semiconductor supply chain, which remains highly sensitive to geopolitical developments.
The probe follows China’s recent announcement of export restrictions on certain dual-use items shipped to Japan that could have potential military applications. These measures come amid an ongoing diplomatic dispute linked to comments by Japanese Prime Minister Sanae Takaichi regarding Taiwan, a highly sensitive issue for Beijing. As tensions persist, investors are likely to remain cautious toward Japanese stocks with significant China exposure.
