Wednesday, September 3, 2014

Uranium emerges from Fukushima shadow

Uranium prices may have stopped falling 3 1/2 years after an accident at the Fukushima nuclear plant in Japan curtailed demand, according to Julian Emanuel, an equity and derivatives strategist at UBS AG.

The mineral’s price increased as much as 18 percent through yesterday from a low of $28 a pound in May. The move reflects prices for swap contracts linked to uranium futures on the New York Mercantile Exchange.

The rebound followed a 59 percent drop since an earthquake and tsunami triggered a meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant in March 2011. Japan’s nuclear-power generators were shut down afterward, and the government has failed to get them restarted.

“Geopolitical tensions” in Russia, Ukraine and other countries are behind the reversal, Emanuel wrote in a report two days ago. The New York-based strategist featured a similar chart in his research.

Kazakhstan, which counts Russia as its second-largest trading partner after China, is the world’s largest uranium producer. The country suspended mine-expansion projects last November because of falling prices. Moody’s Investors Service said yesterday that KazAtomProm, the state-controlled mining company, might lose its investment-grade credit rating as a result of “weak pricing” and other issues.

The recovery may benefit from the shutdown of a Canadian mine and mill owned by Cameco Corp., according to Raymond James and Cantor Fitzgerald. The plants were idled last weekend after the company failed to reach agreement on a contract with union workers. Cameco is the world’s second-largest uranium producer after KazAtomProm, according to the World Nuclear Association.

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