Is The Uranium Price Finally Bottoming?

One sector where we see a great amount of value is the uranium miners (URA) as The Chinese are going full speed ahead in building next generation nuclear reactors. The uranium spot price is just over $40, which is near the bottom of its three year range.

Uranium may represent a bottoming situation. Look for a reversal in the near term and break above the recent downtrend due to the following reasons.

Uranium may represent a bottoming situation. Look for a reversal in the near term and break above the recent downtrend due to the following reasons.

1)64 nuclear reactors are being built all over the world. A new reactor needs three times the amount of uranium that an operating reactor.

2)The world is already in a supply shortfall. Mine supply only provides 144 million lbs to a sectors which needs 180 million lbs. This is being made up by secondary supplies coming from Russia set to end in December 2013.

3)When Russian HEU Deal ends 24 million lbs will need to be made up for or 14% of world’s supply.

4)Japan and Germany may start coming back online as electricity costs soar. Japan is updating 23 reactors. New elections are coming up with the Pro-Nuclear party in a wide lead. Part of the parties platform in further monetary easing and promoting the restart of nuclear reactors.

It is unlikely that the Japanese and Germans will exit nuclear for one reason…soaring electricity costs which is crippling their industries. The Japanese have just bought 23 hydrogen re-combiners from Areva to update nuclear reactors with new safety features. The fact that the Japanese are investing in nuclear shows that they are serious about turning reactors back on. Japan is headed into an election in December where the opposition party who is pro nuclear is leading the polls. This may be a catalyst to spark a rebound in the spot uranium prices.

http://www.dailymarkets.com/stock/2012/12/10/is-the-uranium-price-finally-bottoming/