Japanese Restart Nuclear Reactors Reigniting Uranium Mining Sector
Commodities / Uranium Jul 18, 2014 - 12:03 PM GMTBy: Jeb_Handwerger
Summary
- Contrarian investors buy uranium stocks when the banks and large miners cut their price targets.
- Japan announced that two nuclear reactors were approved for restart.
- The Japanese Nuclear Restart could change the negative and bearish sentiment on the uranium mining sector.
- Uranium decline has been due to Japan shutting down reactors. The price may begin rising as nuclear reactors are turned back on.
- Be prepared for a rally in the uranium mining sector as end user look to once again begin securing long term uranium supply.
Last week I was interviewed about uranium (OTCPK:URPTF) by The Energy Report and I told them to get ready for doubles and triples in uranium and that we may see a powerful bounce off the bottom in the near term. Remember this was at a time that the large miners and the banks were bearish forecasting lower price targets. See the article and charts by clicking here…
Less than one week after that interview was published Japan announces that two reactors are approved to be safe and are able to be turned back on. This is a psychological game changer as the uranium priced has slid for more than three years over 60% as Japan idled their reactors after the 2011 Fukushima Disaster.
Uranium has hit decade lows due to the closures in Japan. Many believed Japan would never return to nuclear. They were wrong.
This approval by the Japanese Nuclear Regulatory Authority signals the fact that major industrial nations require nuclear for cheap and clean energy. This decision by the Japanese NRA tell us the Japanese economy can no longer rely on expensive liquefied natural gas and renewable sources. They must turn to the safer next generation nuclear reactors.
Look for the spot price and the uranium miners (NYSEARCA:URA) to reverse on this fundamental catalyst and the negative sentiment to turn much more positive. The actions of the major producers and banks led me as a contrarian to become more bullish and forecast a bounce off the bottom.
Many of the current producers have had to cancel or mothball higher cost projects due to the low spot price. Before the news today many of the banks have reduced long term price outlooks and were bearish on the sector. The banks and large miners may be wrong about uranium. The current surplus may turn to a deficit very quickly as Japan turns back on the nuclear reactors.
There may be a rally coming up in the junior uranium stocks. The majors such as Cameco and Rio (NYSE:RIO) may underperform as they deal with the many challenges of high cost mines and delays. Cigar Lake has once again been pushed back by Cameco (NYSE:CCJ). The timeline has once again been delayed. For years, Cigar Lake was dealing with flooding problems.
The uranium mining ETF is beginning to breakout from a 10 week base and moving above the 50 day moving average. Look for a new three month high at $15.40 to confirm that the recent approval in Japan is in fact sparking a technical reversal.
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By Jeb Handwerger
Disclosure: Author owns no stocks mentioned.
© 2014 Copyright Jeb Handwerger - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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