For theses who have the time for an excellente read (Part 1) The negative sentiment on uranium was largely made in Japan. The 2011 disaster at Fukushima created an irrational disconnect between sentiment and uranium fundamentals.
Now that enough time has passed since Fukushima, this negative sentiment is losing steam as it appears that Japan has succeeded in bringing some of its reactors back online – four of its reactors have already restarted operations. So the world is refocusing on what are arguably brilliant fundamentals, which actually have been there all along.
First and foremost, the world is building more nuclear reactors right now than ever before, despite Fukushima. A total of 65 new reactors are already going up, another 165 are planned and yet another 331 proposed.
Powering all of these developments will require an impressive amount of uranium. Right now, existing nuclear reactors use 174 million pounds of uranium every year. That will increase by a dramatic one-fifth with the new reactors under construction. But in the meantime, uranium producers have reduced output due to market prices and put caps on expansion. As a result, supplies are dwindling.
Currently, the world is increasingly recognizing nuclear energy as the cheaper, cleaner, and greener option—as indicated by the number of reactors being built.
As the specter of nuclear accidents wanes in the aftermath of Fukushima and climate change fears move to the top of the chain, uranium is set for a global sentiment transformation.
As Scientific American opines, "Nuclear energy's clean bona fides may be its saving grace in a wobbling global energy market that is trying to balance climate change ambitions, skittish economies and low prices for oil and natural gas."
According to Bloomberg, in Asia alone, approximately $800 billion in new reactors are being developed.
The market hasn't quite caught on yet to what this massive nuclear development means for uranium because it's still stuck in the Fukushima sentiment–but the cracks are showing and it's about to break free.
At the same time, the uranium industry is not producing the uranium needed to feed the hundreds of new reactors slated to come online. Not even close. The uranium is not being produced because producers can't turn a profit at today's spot prices.
The minute the market catches on to the massive amount of reactors coming online combined with the pending uranium supply shortage, uranium will experience a price surge like no other commodity before it.
Up to 20 percent of the uranium supply needed to operate the world's existing 437 nuclear reactors for the rest of this year and next is not covered, according to uranium market analyst David Talbot.
The market has recognized the pending lithium boom, for instance, as heralded by the electric vehicle (EV), battery storage and powerwall push. But the market is sleeping when it comes to uranium, which has even more obviously bullish fundamentals. That's why when this sleeping giant awakens suddenly with the start-up of new reactors around the world, it will be with a roar that rewards those savvy enough to sneak around the irrational sentiment.
Determining when the break-out will come, exactly, is part and parcel of playing this rally with an eye to massive returns (for which you can thank the negative sentiment if you're already onto uranium). But all bets are that this year we'll see the first new reactors come online, and then it will snowball from there, transforming from a buyers' market into a sellers' market.