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The uranium spot market will experience increased volatility over the next three to nine months, according to a study released today by Resource Capital Research.
“The impact of the damaged nuclear reactors in Japan to the outlook for nuclear energy will likely take 12 months to fully unfold. However, mid to long term, growth in the sector is expected to remain buoyant, albeit on a flatter trajectory than previously thought, driven by strong fundamentals, including the global need for low carbon, base load electricity generating capacity,” said John Wilson, Managing Director of Resource Capital Research, in a statement.
The uranium spot price is around US$60/lb, but the long-term contract prices is US$73. Resource Capital Research believes that the Japanese issue will be temporary and that uranium will be returning to the US$70 territory.
Germany is temporarily shutting down seven of its 17 nuclear reactors to conduct a safety review. Japan has lost four of its reactors after the earthquake. The study finds that the overall affect on global fuel demand will still be small.
“Japan has 55 nuclear reactors with annual uranium consumption of 21.3mlbs, or about 12-13% of global uranium demand. With the shut down reactors accounting for 20% – 24% of the Japanese fleet, the impact to global uranium demand is about 4-5mlbs on an annualized basis. In relation to the 3 or 4 reactors to be permanently shut down, annual uranium demand is estimated at 1 to 1.5mlbs. With annual global uranium demand from nuclear power of ~185mlbspa, the destroyed reactors represent less than 1% of global uranium demand.”
The study notes that over 25% of the world’s nuclear reactors are over 30% old.
“It is evident that older reactors, certainly those over 30 years, will be under increased scrutiny. However, the key lesson from Japan’s nuclear crisis may point to the need for, and benefit of, greater transparency and accountability of government, and stricter oversight of government nuclear agencies,” said John Wilson.
Michael Allan McCrae wrote this story. You can contact him at [email protected] or @michaelmccrae.
