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Uranium Week: Japan Returns

Weekly Reports | Aug 30 2022

This story features PALADIN ENERGY LIMITED. For more info SHARE ANALYSIS: PDN

News last week of Japan’s plans to restart idled reactors and build new ones provided a boost to uranium markets.

-Japan plans to restart more and build new next-generation reactors
-Only six Japanese reactors currently operating
-The news boosts uranium equities

By Greg Peel

In the wake of the 2011 Fukushima disaster, Japan has 33 remaining commercial nuclear reactors, and electric power companies have asked the Nuclear Regulation Authority to approve the reactivation of 25. To date, 17 have cleared the agency's safety review. Although 10 of the 17 reactors were reactivated after local consent was received, only six are operating.

Japanese nuclear policy has flip-flopped with changes in government in the interim, and a lot of resistance has been met at the local level to reactor restarts. But the situation has changed.

In a policy shift that aims to return Japan to a focus on nuclear power for the first time since Fukushima, Prime Minister Fumio Kishida said last week that the country will restart more idled nuclear plants and consider developing next-generation reactors.

Immediately following the announcement, uranium equities shot up up significantly.

Uranium equities had already been boosted by the passage of the nuclear-supportive US Inflation Reduction Act into law the week before. Industry-specific developments allowed relevant stocks to avoid the carnage wrought on Friday by Jerome Powell’s Jackson Hole speech.

However, in another quiet summer week in the spot uranium market, the last transactions were booked on the Thursday ahead of said speech. Industry consultant TradeTech’s weekly spot price indicator rose US75c to US$48.50/lb.

Given speculative investor interest has dominated the spot market over the last year of financial turmoil, spot uranium prices have been beholden to general financial market volatility. Whether the Japanese news can offset Friday’s Fed-driven market crunch remains to be seen.

There is no such volatility in uranium term markets, which is where actual end-users seek delivery contracts with actual producers. Term markets have been dominated since February by the war in Ukraine and its global energy supply ramifications.

TradeTech’s term market price indicators remain at US$51.50/lb (mid) and US$53.00/lb (long).

TradeTech reports several utilities are close to reaching final agreement on terms with suppliers. Separately, a number of utilities are expected to enter the market in the coming months.

Paladin Energy

Australian-listed Paladin Energy ((PDN)) released its FY22 report last week. Earnings are not in focus as the company is in the process of restarting its Langer Heinrich project after a long post-Fukushima hiatus and has recently successfully raised new capital to that end.

The project is on track and uranium prices remain supportive, with Macquarie making no changes to its forecast of positive earnings from FY24.

Uranium companies listed on the ASX:

BKY 29/08/2022 0.3300 0.00% $0.64 $0.14
BMN 29/08/2022 2.3700 14.04% $2.29 $0.15
BOE 29/08/2022 2.5900 3.03% $3.10 $0.17 $2.600 0.4%
ERA 29/08/2022 0.2600 0.00% $0.58 $0.16
LOT 29/08/2022 0.2700 19.05% $0.46 $0.19
PDN 29/08/2022 0.8500 13.24% $1.12 $0.52 -136.4 $0.900 5.9%
PEN 29/08/2022 0.1900 13.33% $0.35 $0.14
VMY 29/08/2022 0.1900 0.00% $0.33 $0.11

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