After the devastating earthquake and subsequent fallout in Fukushima, Japan is set to turn back on its nuclear reactors, bolstering uranium prices and nuclear industry related exchange traded funds.
Bank of Nova Scotia predicts that uranium prices could jump 40% by the end of the year and fuel greater merger and acquisition activity in the rare earth metal mining space as Japanese power plants restart, reports Tara Lachapelle for Bloomberg.
“Now is a great time for cherry-picking good assets,” Rob Chang, a Toronto-based analyst at Cantor Fitzgerald LP, told Bloomberg. “We think 2014 is going to be really the kick-off year for the uranium space. The timeframe for cheap acquisitions may be running out.”
Ben Isaacson and Shawn Siddiqui, analysts at Bank of Nova Scotia, argue that uranium has bottomed out and is set to recover.
“When the uranium market starts to pick up steam, we expect to see increased M&A activity,” according to a Bank of Nova Scotia report.
Ever since the Fukushima disaster, uranium stocks have plunged and their median price-book ratio is still hovering around half of where it was before the earthquake. Futures on uranium’s tradable U308 ware at $35.7 per pound this week, compared to $67.5 before the 2011 calamity.
Japan, formerly Asia’s largest nuclear power producer, could restart one in every five reactors this year, pushing uranium prices to about $50 per pound, according to Analysts’ median estimates.