Moribund uranium industry

burial.uranium-industryJapanese nuclear forecasts and other key indicators point to lower uranium prices (T.CCO) Stockhouse Editorial, 23 April 14, 
The following is an excerpt from Canaccord Genuity’s Morning Coffee newsletter.

According to UxC, the uranium spot price dropped US$0.50 this week to US$32.50 a pound, the lowest price in more than eight years (lowest level since November 2005). Canaccord Genuity Base Metals analyst Gary Lampard believes that uranium prices are already close to marginal production costs, and sees minimal potential for substantially lower prices than current.

Further production cutbacks are likely as high-priced contracts from pre-2011 are finally filled and need to be replaced. However, we note Ux Consulting commentary that “key market indicators are already pointing toward lower spot prices, with the question being not if this will happen, but when it will happen.”
The extent and speed of Japanese reactor re-starts is a key forecasting parameter, and we note commentary from Ux Consulting that “it now appears that only a few Japanese reactors may actually restart in 2014, compared to the previous estimate of up to 10 reactors,” and that even after re-starts of Japanese nuclear reactors, “it may be years before they return to the market given their large inventory positions.” We also note a Reuters analysis, “based on questionnaires and interviews with more than a dozen experts  and input from 10 nuclear operators” published on April 1, 2014, concluded, “fewer than a third, and at most about two-thirds, of the (idled) reactors will pass today’s more stringent safety checks and clear the other seismological, economic, logistical and political hurdles needed to restart,” and that of the 48 non-Fukushima Daiichi reactors, “14 will probably restart at some point, a further 17 are uncertain and 17 will probably never be switched back on.”



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