Slow Turnarounds on Nuclear Restart Decisions Affect Japan Steel Works

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the first time in 40 days, Japan's Nuclear and Industrial Safety Agency (NISA), has held a nuclear specialist consultation. The consultation is an essential portion of the reactor safety evaluation process. In April, NISA was supposed to hand over the nuclear safety evaluation proceedings to a new government entity that was being formed--the Japanese equivalent of the U.S. Nuclear Regulatory Commission (NRC). However, the Japanese NRC has not yet been fully established, leaving the processing of nuclear safety evaluations in the hands of NISA. This delay has set in motion a chain reaction that reaches from the Japanese government to the country's domestic industries.

As of May 10, 2012, of 19 stress test results submitted to NISA, only three units have been passed on to the next stage of evaluation: Oi nuclear power station units 3 and 4, owned and operated by Kansai Electric Power Company Incorporated (TYO:9503) (Osaka, Japan) (Kanden); and Ikata nuclear power station Unit 3, owned and operated by Shikoku Electric Power Company Incorporated (TYO:9507) (Takamatsu, Japan) (Yonden).

Part of NISA's evaluation process involves hearing the opinions of a panel of experts at a nuclear specialist consultation. Thinking that evaluation responsibility was to be handed over to the new Japanese NRC, NISA hadn't held a nuclear specialist consultation since the end of March. The current nuclear specialist consultation is examining Kanden's Takahama nuclear power station's units 3 and 4, submitted April 27 and April 6, respectively; and Shiga nuclear power station Unit 2, owned and operated by Hokuriku Electric Power Company Incorporated (TYO:9505) (Toyama, Japan) (Rikuden), submitted February 1.

With so many nuclear reactors offline, the demand for parts specially made for nuclear reactors has dropped. This drop in demand has affected suppliers' profits. For example, Japan Steel Works Limited (TYO:5631) (Tokyo) (JSW) reported a 24% drop in net profit in March, which has been attributed to the lack of demand for highly profitable materials for use in nuclear power stations and other energy-related industries. While demand for resin manufacturing and other industrial machinery has helped to mitigate the drop in profits to an extent, the loss of energy sector profits may affect JSW's future growth. JSW also announced in its mid-term business strategy that it expected more than half of its operating profits to come from the industrial sector, predicting that the recovery of the nuclear power industry would be difficult, even in the international market.

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