Japan Part 2

by Larry Levin

The Japanese stock market dropped 6% Monday and is down another 6% as I write this, which is already Tuesday in Tokyo.  The latest drop in the Japanese market was surely due to the growing devastation being revealed – and the 3rd explosion at the nuclear plant.
 
From the New York Times we read...
 
An explosion early Tuesday morning damaged the No. 2 reactor at Japan's Fukushima Daiichi Nuclear Power Station, the third in a series of blasts that have now hit each of the three crippled reactors at the plant, plant officials said.

It was not immediately clear if the blast was caused by the buildup of hydrogen, as occurred at the two other reactors at Daiichi - one on Saturday and the most recent one on Monday, when there was also a large explosion at the No. 3 reactor. Some early reports in the Japanese press suggested the latest explosion amounted to a different and more critical problem than the previous two.

This explosion, reported to have occurred at 6:14 a.m., happened in the "pressure suppression room" in the cooling area of the reactor and inflicted some degree of damage on the pool of water used to cool the reactor, officials of Tokyo Electric Power said. But they did not say whether or not the incident had impacted the integrity of the steel containment structure that shields the nuclear fuel.

Any damage to the steel containment vessel of a nuclear reactor is considered critical because it raises the prospect of an uncontrolled release of radioactive material and full meltdown of the nuclear fuel inside. To date, even during the four-day crisis in Japan that amounts to the worst nuclear accident since Chernobyl, workers had managed to avoid a breach of a containment vessel and had limited releases of radioactive steam to relatively low levels.

Details of what happened remain unclear, with executives of Tokyo Electric Power, the plant's operator, giving only preliminary reports and declining to answer questions from reporters pressing for more information, while repeatedly apologizing "for causing concern and inconvenience."
 
The US market tried mightily to ignore the Japanese situation, the worsening banking problems in Europe, and the growing Saudi-Bahraini problems on Monday and faired well considering.  However, it seems implausible that these problems can be ignored indefinitely.  Watch for weakness soon.

 

Trade Date: 3/14/11
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