HandoutThe No.3 nuclear reactor of the Fukushima Daiichi nuclear plant is seen burning after a blast following an earthquake and tsunami in this satellite image taken March 14, 2011.
It has been more than four years since Japan’s Fukushima nuclear facility was crippled by an earthquake and tsunami. The uranium market was also crippled by that incident, in part because Japan’s nuclear reactors were all shut down as a precautionary measure. That created a major over-supply situation, and led to fears that Japanese utilities would sell their unused uranium inventory and flood the market.
The Japanese plants have remained idled for far longer than most analysts expected. But on Tuesday, one nuclear reactor in southern Japan is finally set to restart. A second reactor at the same facility is expected to come online in a couple of months.
This is an important de-risking event for the uranium market, said BMO Capital Markets analyst Edward Sterck.
“Whilst Japanese utilities are sitting on significant excess inventories, the fact that these will now start to be consumed (domestically) should ease fears of sales from inventory,” he said in a note.
Additionally, he said this event is important because it shows there is a regulatory restart process in Japan that actually works, which clears the way for more of them. After numerous delays, investors were losing confidence in the entire process.
“However, hurdles do remain, particularly in securing local approval on a reactor-by-reactor basis,” Sterck said.
Uranium prices have been stuck in a rut ever since the Fukushima disaster, and investors have been waiting for a catalyst (such as Japanese reactor restarts) to turn the market around.
The spot uranium price was US$36 a pound last week, according to industry consultant TradeTech. It was above US$60 prior to Fukushima.
Read more at the Financial Post: https://business.financialpost.com/investing/trading-desk/a-glimmer-of-hope-for-uranium-as-japanese-reactor-set-to-restart