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.
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“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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