Fission Uranium Corp T.FCU

Japan Nuclear-Power Jitters Weigh Global Uranium Market

[SheepRiver]

July 31st Wall Street Journal Japan Nuclear-Power Jitters Weigh on Global Uranium Market Antinuclear sentiment in Japan, weak U.S. demand, rising Chinese stockpiles depress price of nuclear fuel Police officers and security personnel stand guard at an entrance of Kyushu Electric Power's Sendai nuclear power station last August. Photo: Reuters By Rhiannon Hoyle and Mayumi Negishi Five years ago, meltdowns at the Fukushima Daiichi power plant in Japan sparked what would become a prolonged slide in prices for uranium nuclear fuel. Today, the worlds worst nuclear disaster in a quarter-century is depressing prices again. Antinuclear sentiment is gaining momentum in Japan with the election three weeks ago of an antinuclear governor in the only Japanese prefecture with an operating nuclear-power plant, and the likelihood that a court injunction will halt the next reactor slated to go online in August. Japan was once the worlds No. 3 nuclear-power generator, behind the U.S. and France. The slump in the uranium market is being exacerbated by weak demand from the U.S. and plentiful uranium supplies in China, an emerging nuclear-power producer. The price of uranium has slumped to $25 a pound, its lowest level since April 2005, according to the Ux Consulting Co., a nuclear-fuel research firm that publishes weekly market prices. The fuels value is down 27% since the start of this year and is a fraction of the $136 a pound it traded for at its 2007 peak. It is the worst-performing mined commodity this year. Other natural resources such as copper, coal and iron ore have gained year to date. There is plenty to fret about. In the U.S., a market awash with cheap natural gas, nuclear reactors have been closing. A few years ago, France said it would start reducing its reliance on atomic energy. China, while rolling out a broad expansion of its nuclear fleet, has built up inventories of uranium that could last more than a decade. In Japan, a long-awaited revival hasnt happened. Fukushima Still Rattles Japan, Five Years After Nuclear Disaster Japanese Court Orders Shutdown of Nuclear Reactors Japan Elections: Antinuclear Candidates Win Poses Risk to Plant Restarts The Fukushima Daiichi meltdowns in 2011 sparked protests and the shutdown of its fleet of 50-plus nuclear plants, and tarnished uraniums image globally. The government had planned to restart more than 30 reactors by 2030, and analysts had expected as many as 10 back online by 2017. Now, it isnt certain the two reactors that are operating will remain running and that the dozens of other reactors not slated for decommissioning will ever be restarted. The restart pace is way behind earlier expectations, said Jonathan Hinze, international executive vice president at Ux Consulting. As long as the Japanese reactors are sitting idle, it just keeps feeding the negative perceptions in the uranium market about the demand side. A court injunction in March forced Kansai Electric Power Co. 9503 -4.18 % to halt its Takahama plant, less than two months after it went online at the beginning of the year. The court said the utility had failed to show that the plant would be safe in the event of a quake or tsunami. The governor of Kagoshima, Satoshi Mitazono, elected three weeks ago, has promised voters to suspend operations at the only other plant in operation, Kyushu Electric Power Co. 9508 -0.72 % s Sendai nuclear plant. He cited heightened fears among residents following the April quakes in the Kumamoto area, which had long been thought to be safe from large tremors. Residents across Japan are seeking court injunctions to prevent restarts elsewhere, including a suit to stop the planned August restart of Shikoku Electric Power Co. 9507 -1.86 % s No.3 reactor at its Ikata plant. In 2010, before Japans mass nuclear-plant closures, the countrys reactors accounted for roughly 12% of uranium demanded by the global nuclear-energy sector, according to the World Nuclear Association, an industry group. The U.S. accounted for 28% and France roughly 15%. The fate of Japans sidelined reactors remains an important driver of market sentiment, producers and analysts say. Unlike commodities such as copper or oil, the uranium market is dominated by a small number of mining companies and utilities, and buyers tend to agree to deals years in advance. That means expectations for future supply and demand can move prices. Mr. Hinze said a global glut in U3O8, a common compound of uranium, is deepening. Annual supplies of about 200 million pounds are well above the 170 million pounds needed each year to feed the worlds operating reactors. Stockpiles have climbed from virtually nothing before the Fukushima disaster to more than 1.4 billion pounds now, Mr. Hinze estimated. In the U.S., five reactors have shut since 2013, and over the past year or so, an additional seven reactors in the U.S. have been slated to close early. Ux Consulting said China already has about 300 million pounds of U3O8 stockpiled, enough to last it years even as it ramps up production of nuclear power. Uranium producers remain upbeat on the eventual prospects for uranium as emerging economies build up their power infrastructure. China has stepped up efforts to introduce cleaner energy and has the worlds largest pipeline of nuclear-power plants. More than 30 reactors have been built in China since the 1990s. There are now another 20 under construction in China, according to the International Atomic Energy Agency. Nuclear-power generation increased by 1.3% in 2015, underpinned by a roughly 30% increase in Chinas output, according to a World Nuclear Industry Status Report. Still, annual nuclear electricity generation, at 2,441 net terawatt-hours, was 8.2% below 2006 levels. Despite the current market challenges, we remain confident in nuclear power, Canadas Cameco Corp. CCJ 0.63 % said Thursday as it reported a quarterly net loss. Cameco is the worlds No. 2 uranium mining company by market share, behind Kazakhstan state-owned NAC Kazatomprom JSC. Shares in Cameco are down about 26% in 2016. Capital Economics anticipates more new plants will spur a recovery to $35 a pound by the end of 2016 and to $40 a pound by the end of next year. Others remain cautious. Macquarie said in a July 26 note that it is increasingly difficult to see what drives uranium materially higher from here. Mr. Hinze said one of the main sources of demand now is from traders who are buying low-cost material for longer-run deals with utilities. We call this demand stealing from the future, he said, as its basically a way of moving future demand into the present. Write to Rhiannon Hoyle at [e-mail] and Mayumi Negishi at [e-mail]