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Index / Uranium (Nuclear Minerals) / Nuclear Power - Economics, Design, and Industry

3/8/2015 by mdc
The uranium sector was hit hard in the aftermath of the 2008 Financial Crisis, then came another crisis in 2011, when a massive earthquake damaged nuclear facilities in Japan. Nuclear power generates electricity, and oil is primarily used as a fuel for vehicles. Because of this, uranium and oil don't truly compete for the same markets. For that reason, investors should not be selling uranium stocks just because oil is cheap. The energy sector crash has also led to tax-loss selling at the end of 2014. That means beaten down stocks in this sector could be poised to rebound in January and beyond. Let us take a look at a few other positives -

A recent - December 30, 2014 - Barron article titled - Uranium Regains Its Glow -points out that spot prices have jumped from just 28 dollars per pound in May to 44 dollars per pound at the end of 2014. It also points out the recent re-election of the Japan (pro-nuclear power) Prime Minister Shinzo Abe means that the Nuclear Regulation Authority in that country is moving forward with approvals for nuclear power plants to re-start. Analysts at Credit Suisse expect that 6 nuclear plants will be restarted in 2015, and that 22 will be operating in Japan by the end of 2018. That is a significant amount of increased demand for uranium coming in the next few years. However, the expected demand longer-term could be huge, based on what China has planned. The Barron article states that The second largest economy intends to have 58 gigawatts of nuclear power capacity in 2020, up from 19.2 GW currently, with a further 30 gigawatts still under construction. China currently sources about 5 million pounds of uranium a year from domestic sources and imports between 10 million and 15 million pounds. Should China grow its nuclear power capacity to 58 gigawatts, it would require 50 million pounds a year and more, according to Credit Suisse hence supporting additional price rises.

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