Here’s This Year’s Second-Best News In Uranium

It’s official — Japan is back in the nuclear business. Again. 

Sources from Japanese utility Kyushu Electric confirmed Thursday that the No. 2 Sendai nuclear reactor was restarted this week. With the plant now expected to return to full operating capacity. 

That comes just two months after the No. 1 Sendai reactor was restarted in August. Which, at the time, was the first nuclear plant to come back online since Fukushima in 2011. 

There’s been a lot of press around the event in the uranium community. With speculation running high that the restart could give a further psychological lift to the metal.

Trading in the uranium market the last few months indeed lends some support to this view. With the uranium spot price having risen about 5% since the No. 1 restart — to $38 per pound, representing the highest price since April. 

If the news about the No. 2 fire-up can push prices above $40, they’ll be approaching the levels we saw in the late-2014 spike — when speculation about Japan’s return to nuclear power drove prices from $28 to as high as $44 in a matter of months. 

The bottom line is, this can’t hurt for uranium investors. Although the story could be different in other parts of the energy market.

Especially crude oil. With sources from Kyushu Electric telling Platts the company expects to greatly reduce its crude and fuel oil demand after the No. 2 restart. 

The utility now estimates it will burn just 629,000 barrels for the December to March 2016 period — down a stunning 87% from the 5 million barrels consumed during the same period last year. 

That’s going to particularly affect Indonesian crude exports. With Indonesia’s high-acidity crudes having been a favourite for direct burning by utilities in Japan. 

Keep an eye on both the uranium and oil markets for some potential readjustments over the coming months. 

Here’s to doing it all again,

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Dave Forest

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