Market Watch
Nuclear power market still suffers from Japan’s Fukushima disaster

Friday, March 11, 2016

It’s been five years since Japan suffered one of its worst disasters, and nuclear energy still has a bad rap.

March 11 marks the anniversary of the country’s 2011 earthquake, tsunami and nuclear plant meltdown, the triple disaster that took the lives of nearly 16,000 people—and rattled confidence in what was seen as a very promising form of alternative energy.

Massive tsunamis created by the 9.0 magnitude Tōhoku earthquake, the strongest ever recorded in Japan, flooded the Fukushima Daiichi power plant and caused the worst nuclear disaster in a quarter century.

“Unfortunately, the uranium [and] nuclear market is still suffering significantly as a result of the Fukushima aftereffects,” said Jonathan Hinze, executive vice president of international operations at the Ux Consulting Company, the world’s leading nuclear-fuel consultancy.

In the wake of the nuclear accident, nuclear power became somewhat of an outcast. Germany chose to completely phase out nuclear energy. By Sept. 15, 2013, all of Japan’s nuclear facilities were completely shut down in the wake of strict safety standards adopted after March 2011. Japan didn’t see any nuclear units come back online until August of 2015.

The process of restarting reactors in Japan “has literally been a case of three steps forward, one step back,” William Freebairn, senior managing editor at Platts Nuclear Publications, told MarketWatch.

“Three of the country’s 43 reactors were back online by the end of January after securing the need approvals to resume operations, but one of those was forced to shut this week,” he said. A court ruling to shut down a reactor was made in a case brought by residents concerned about safety.

Uranium supply 'overhang'

Back in September, Jim Ostroff, senior editor of Platts Nuclear Publications, estimated that Japanese utilities had around 120 million pounds of uranium stockpiled, which was likely enough to have supplied all of Japan’s pre-Fukushima needs for six years. 

Today, there remains an “overhang of excess supply to demand,” he said.

With such few active reactors, the Japanese are not buying uranium to make nuclear fuel and the companies that make the fuel from uranium, known as converters, are selling excess amounts because prices are so low, said Ostroff.

“With little, if any, demand to purchase [uranium] right now on the spot market, utilities are leery to buy any material because they are looking for a bottom” in prices, he said.

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