Japan's steelmakers, the nation's biggest users of electricity, urged the early restart of nuclear power plants on Wednesday, fearing that potential power cuts and more costly electricity will further squeeze a sector reeling from the strong yen.
Big businesses have reacted furiously to plans by Tokyo Electric Power Co, or Tepco, to raise charges but had refrained from calling for the restart of reactors, wary of an angry response from a public worried about nuclear safety due to the Fukushima radiation crisis.
Public safety fears since Fukushima have prevented the restart of reactors shut for routine checks, forcing utilities to import more fossil fuels and gas to run their power generators and supply electricity, hitting their profits and prompting them to raise charges for industrial users from April.
The last two of Japan's 54 reactors still operating are due to close by late April for routine checks, but the government still remains unclear about conditions of restarts after they came up with new guidelines of safety checks.
The smooth restart of nuclear power plants after safety checks is very important for Japanese manufacturers, said Eiji Hayashida, chairman of the Japan Iron and Steel Federation.
Utilities other than Tepco will also be forced to raise electricity charges if they have to turn to gas-fired plants.
Unstable power supply and high power costs will drive more Japanese manufacturers abroad, said Hayashida, who is also president of JFE Steel Corp, the world's fifth-biggest steelmaker.
In profit terms, Japan's steel sector was the biggest loser among Asian peers in the quarter to December as the strong yen squeezed exports, opening the door for cheaper imports, pressuring prices in the domestic market. Steel imports jumped 22 percent in 2011 to a 13-year high.
A supply glut in Asia and a slowdown in demand in China, the world's top producer and consumer, in a knock-on effect of Europe's debt woes, have also weighed on prices.
The industry body said last month that Tepco's planned price hikes would sap the profits of the struggling steel sector by 20 billion yen a year, with the electric furnace industry, which melts scrap to produce construction steel, hit particularly hard.
Last month, smelters of copper and zinc, another a power hungry industry, said Tepco's price hikes alone would squeeze 5 billion yen profit a year. I wonder how many Japanese people know that shutdowns of nuclear reactors have a serious impact on Japanese manufacturers, said an official of an aluminium mill.
No nuclear reactor can restart until it meets new safety checks to confirm it can withstand earthquakes and tsunamis on the scale that wrecked Tepco's Fukushima Daiichi plant and must receive clearance from the central and local governments.
Early this month, the government's nuclear safety watchdog approved first-stage stress tests on an initial pair of idled reactors, but the government has yet to make clear if second-stage stress tests -- simulations in which a nuclear plant is exposed to several severe events at the same time -- are also necessary.
Tepco decided last month to raise electricity prices for businesses by an average of 17 percent, citing a higher import bill as it shifts to fossil fuel-fired power generation.
All but two of Japan's 10 major electric utilities tumbled into net loss in the April-December period due to higher fossil fuel charges.
(Reporting by Yuko Inoue; Editing by Michael Watson)