ASX - Paladin Energy up over 20 per cent - ending the week at 42 cents:
After lying dormant for nearly four years two of Japan's nuclear reactors have been approved to reopen as soon as next year, triggering a surge in the uranium spot price.
The reactors at the Sendai Nuclear Power Plant are just two of the 48 reactors in Japan that went offline in the period following the 2011 Fukushima nuclear disaster.
Positive sentiment in the spot market led to a sharp increase of $US5.75/lb to $US42.00 last week, however there has been little change to futures price, which industry sources say may suggest the movements are more closely related to sentiment than an actual pick-up in uranium demand.
Stocks of local uranium miners have nonetheless jumped this week, with Paladin Energy up 20 per cent to 38.5 cents since Friday, ERA gaining 11.5 per cent to $1.355 and Toro Energy rising 8 per cent to 9 cents since since Monday.
On Wednesday uranium traded at $US41.90 per pound, still well below the $US80 per pound believed to be required for most uranium producers that have shut down production to restart.
Uranium One's Honeymoon mine is just one that was shut down in late 2013 due to the slump in uranium prices.
Along with the approval to restart the reactors at Kyushu Electric Power Co.'s Sendai station, UBS analysts noted the Sentient Group's $10 million investment in Toro Energy Limited as another key influence on the uranium industry in the past week.
The Sentient Group will also provide an additional $10 million in funding for Toro's advanced Wiluna uranium project in Western Australia.
Since the Fukushima disaster, nuclear power electricity generation in OECD countries has dropped by 16 per cent, however a moderate rebound is expected to continue as Japan reopens its dormant reactors.
According to the Bureau of Resources and Energy Economics (BREE) prices for uranium in 2015 are expected to rebound in response to expected higher consumption not only in Japan but also in China.
In their September Resources and Energy Quarterly BREE analysts forecast a uranium spot price average of US$39.50 in 2015, which is 23 per cent higher than in 2014.
Looking further into the outlook period BREE's report said "uranium prices are projected to increase in response to tighter market supply conditions to around US$62 a pound in 2019 (in 2014 dollars)."
In Australia export volumes are estimated to have dropped 35 per cent in 2013-14 to around 5400 tonnes, however Australia's recently signed bilateral nuclear cooperation agreement with India is expected to contribute to a gradual 10 per cent increase over the next five years.
Read more: http://www.smh.com.au/business/mining-and-resources/japan-causes-uranium-spot-price-surge-20141112-11l8c4.html#ixzz3JBPhgjGT
