2 Uranium ETFs to Access the Nuclear Trade

Uranium remains controversial even six years after the 2011 Fukushima disaster in Japan. In response to the fallout, anti-nuclear activists have aggressively petitioned courts to block restarting the plants. Japanese Prime Minister Shinzo Abe has also been a vocal nuclear power proponent, arguing that atomic power, which generated almost one-third of Japan’s electricity pre-Fukushima, helps diminish the country’s reliance on expensive fossil fuel imports.

Related: Uranium ETF is Getting Radioactive Again

“We forecast uranium prices will increase significantly through our forecast period due to cost curve economics, declining contract coverage, and required incentive price for new mine supply. Near-term, we think prices are relatively range-bound near $20-25/lb U3O8 in 2017- 2018. As cost curve economics take effect and contract coverage declines in 2019-2021, we forecast an increase to $30-40/lb. Post-2021, we believe the market should move towards a deficit and new mine supply may be required, resulting in uranium prices at $50/lb in 2022, $60/lb in 2023-2025 and $70/lb in 2026-2028. Longer-term, we forecast $65/lb based on the marginal cost of production,” according to an RBC note posted by Barron’s.

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