The impending release of contaminated water, which has already been treated, is exacerbating worries in Japan’s neighboring countries, particularly regarding the consumption of seafood caught in the area. Radioactive material released during the 2011 incident, when an earthquake and subsequent tsunami damaged the plant's emergency generators, contaminated the water which was used to cool the reactors from the Fukushima Nuclear Plant. The recent greenlighting of the release from the United Nations’ (UN) International Atomic Energy Agency (IAEA) is aggravating the concerns. The water is set to start being released in August, but the process will take decades.
According to a Gallup poll in June, in Korea, which was Japan’s third largest export market for HS code 03 products in 2022, over 78% of people are worried about the effects of the release on marine life. So far, the concerns have led consumers to stockpile sea salt, which resulted in its sharp price increase.
Korea has banned imports of seafood from districts near Fukushima since 2013. The Korean Government recently confirmed that the import ban will continue. Separately, the government also validated the findings of the IAEA report, which met opposition in some sectors. In fact, the main opposition party called to expand the current import ban to all Japanese seafood products. It’s worth noting that the position in Korea regarding the release has been highly politicized.
Korean imports of Japanese seafood suffered in May, but this doesn’t tell the whole story. The latest Korea Customs data showed that Korean imports from Japan of HS Code 03 products, which include fish, crustaceans, mollusks, and other aquatic invertebrates, dropped by 31% YoY in May to 2.1 thousand mt. The import volume during May 2023 was 10% down from the five-year average from the period.
Source: Tridge and Korea Customs
Part of this decline could be attributed to concerns over the release of the Fukushima water. However, an abnormally higher import price could also be behind the decline in demand. In May, the average import price of HS Code 03 products from Japan stood at USD 6.62/kg, up by 42% compared to May-21, the fastest YoY growth pace since at least 2018, and up by 49% compared to the five-year average for the same period. This considerably high price is naturally hampering demand in volume. In fact, import value from Japan (the sum of import volume multiplied by the import price) was only down 2% in May. From Jan-23 to May-23, total import value from Japan was actually up by 10% YoY to USD 73.5 million.
Yet, the recent aggravated concern is yet to be reflected in the data. Import volumes could likely be affected further in the upcoming months due to growing concerns over the release of the wastewater. However, it is yet to be seen if the effect lasts only some months or extends further.
Meanwhile, the concerns over the possible effects of the release aren’t just limited to the seafood imports from Japan but also to Korea’s own domestic seafood products and other products from the area. Yet, the magnitude and range of the effects remain unknown. Short-term stockpiling for nearby seafood products could ensue and elevate prices. Demand for seafood from other countries could also grow.
Yet, it’s worth remembering that when the Fukushima nuclear disaster happened, Korean seafood import volume from Japan sharply declined. Import prices from Japan also started a clear upward trend and have become more volatile to this day.
Source: Tridge and Korea Customs
This could signal that all worries regarding the potential water release have already been “priced in” since a decade ago, and the effects of current concern on trade might be negligible. The slight YoY decline in import value during May 2023 supports this view.
For now, the IAEA and the Korean government maintain that the wastewater release plan is safe. Yet concern remains and continues representing at least a short-term risk for seafood trade in the area, with the most likely development being a decline in overall Korean seafood supply, and therefore higher prices, as imports from Japan drop or face further scrutiny.