Uranium Rebound Seen as Japan Considers Nuclear
By Ben Sharples
Uranium is poised to rebound from a second annual decline as Japan considers restarting its atomic plants almost two years after the Fukushima disaster and China pushes ahead with the world’s biggest nuclear building program.
The price of the fuel for immediate delivery may average $55 a pound in 2013, according to the median of five analyst estimates in a Bloomberg News survey conducted last month. The nuclear fuel slipped 14 percent to an average $48.72 in 2012 and traded at a three-year low of $40.65 in November, data compiled by Bloomberg show.
A revival in demand from Japan is raising the prospect that supplies of the radioactive metal will shrink at the same time as China continues with a project to increase its nuclear power capacity at least fivefold by 2020. That’s a boost for uranium producers such as Perth, Australia-based Paladin (PDN) Energy Ltd. It’s also a blow for liquefied natural gas exporters including Qatar and Australia, which have helped plug Japan’s power shortage since the earthquake that led to the meltdown at the Fukushima Dai-Ichi plant in March 2011.
“The biggest pressure on price at the moment is not necessarily the downgrade to demand since Fukushima, it’s this massive inventory overhang,” said Joel Crane, the vice president of research at Morgan Stanley in Melbourne. “Should the Japanese government give the green light to restarts, that overhang is instantly gone and that will be very positive for prices.”
The uranium forecasts for 2013 ranged from $45 to $62.60 a ton in the Bloomberg survey conducted Dec. 10 to Dec. 19. That compares with a three-year high of $73 in February 2011, according to data from Roswell, Georgia-based Ux Consulting, which advises the nuclear industry. The fuel averaged $56.80 in 2011 and was $43 a pound on Jan. 3.
The price plunged as low as $49.75 a ton in March 2011 after Japan’s biggest earthquake on record and a subsequent tsunami damaged reactors at the Fukushima site run by Tokyo Electric Power Co. (9501), releasing radiation and causing the evacuation of 160,000 people. The government responded to the disaster by keeping all 54 of the nation’s then-functioning atomic plants shut after safety checks, while countries from China to France reviewed their nuclear policies and Germany said it would close its facilities.
Japan’s 10 regional utilities generated or purchased 2.4 percent of their electricity from nuclear plants in November, down from 27 percent in February 2011. Japan’s installed nuclear capacity is 46,148 megawatts at its 50 operable plants. Fossil- fuel plants accounted for 73 percent, up from 50 percent.
Speculation that uranium demand will rebound has grown since Dec. 16, when Japan’s Liberal Democrat Party won a landslide election victory. The previous administration of the Democratic Party of Japan, which ordered the shutdowns, planned to phase out nuclear power by the end of the 2030s. The LDP was ousted in 2009, two years before Fukushima, after ruling for all but 10 months since 1955 and overseeing the country’s development of atomic energy.
The new government plans to establish a variety of sources for electricity generation within 10 years, including a review of the plan to exit nuclear power, Trade Minister Toshimitsu Motegi said Dec. 28.
“We can’t say for sure that Japan will be free of nuclear power by the 2030s,” Motegi said at a news conference in Tokyo. “We will make our decisions based on technological findings and not with prejudgment.”
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