Japan's hafnium imports more than tripled year on year in January-November, largely owing to rising demand from the country's nuclear power industry, which aims to secure more material for reactor rods amid a global supply squeeze.
Hafnium imports surged to 2,144kg in January-November from 658kg a year earlier, according to customs data. By origin, the steepest jump is attributed to Germany with 973kg — in stark contrast to 2022, when Germany exported less than 1kg to Japan — potentially reflecting increased sales by trading firms.
Imports from China — the largest exporter to Japan in 2022 — slumped to 117kg in January-November, down by 72pc from a year earlier, as China directs more of its hafnium towards its own semiconductor and nuclear industries, planning to build several new nuclear reactors by 2030.
Japan's government and power utilities aim to restart 21 nuclear plants that have remained suspended since the Fukushima Daiichi nuclear disaster in 2011 that temporarily shut all the country's operable reactors.
The country's nuclear regulation authority has lifted its ban on moving nuclear fuel within Tokyo Electric Power's Kashiwazaki-Kariwa nuclear power plant — the world's biggest nuclear plant, according to the utility — bringing its reactors closer to a restart. Tokyo in June last year also passed legislation to extend the lifespan of nuclear reactors beyond their 60-year limit, by excluding the time spent on the post-Fukushima safety scrutiny.
But a sharp increase in hafnium imports does not mean an immediate restart of the reactors as it requires the consent of local authorities, which may take time.
Hafnium is typically extracted as a by-product in the refining of nuclear-grade zirconium, and while the nuclear industry accounts for around 15pc of hafnium demand, supply in recent years has fluctuated depending on demand for nuclear-grade zirconium. Global demand for hafnium from the nuclear industry will increase by 4pc/yr in the near term, Europe's Critical Raw Materials Alliance estimates.
Global supply squeeze
Japanese importers have also been keen to stock up on hafnium because of the global supply squeeze, which became particularly acute in 2023, lifting Argus' Rotterdam benchmark to a record high of $6,950/kg duty unpaid from 27 June-19 September. Prices have since softened slightly, last assessed yesterday at $5,250/kg duty unpaid, but remain several times higher than pre-2022, when the index rarely breached $1,000/kg.
The shortage stems from a significant rise in demand from several sectors — in particular, manufacturers of jet engines, industrial gas turbines, electronics and nuclear energy components — amid the emergence of new technologies and applications. The hafnium supply base is notoriously difficult to expand, largely because it is a by-product of zirconium refining. Around 50t of zirconium must be produced to generate 1t of hafnium, and the economics can be such that producers do not often feel it worthwhile to pursue extra hafnium units.
Looking ahead, French and US hafnium producers are understood to be sold out for 2024. Several companies were previously noted to be seeking higher amounts than normal for 2024 delivery, and some suppliers have already committed some material to 2025.
All eyes will be on China this year to see how much will be exported and how regional inventories shape up around the world, which may have a significant impact on the direction of spot prices.
