Earlier today we delved into the news that Japan officially made it clear nuclear power would remain an important component of its energy mix. For the government the pain of expensive energy imports – necessary since it shut down its nuclear reactors after the Fukushima Daiichi nuclear disaster back in March 2011 – is something it must weigh against public sentiment, which is vehemently anti-nuclear in some quarters especially following Fukushima. The latest policy suggests a pro-nuclear stance is winning out. As Mineweb’s Geoff Candy noted earlier today in outlining analyst commentary, this could bode well for uranium equities.
Uranium prices are in the dumps. Utilities – the main demand for uranium – sit on the sidelines happy not to sign long term uranium buying contracts. But with restarts that could change, the thinking goes, both for U3O8 prices and investor views of uranium equities, as Dundee analyst David Talbot suggested in recent research. And in a comprehensive overview of the uranium sector, Talbot said the change in U3O8 prices may come quick.
“Not only do we anticipate Japanese restarts to be the catalyst to kick start uranium buying and contracting, but the lack of deals during 2013 resulting in elevated uncovered uranium requirements at the utilities will mean that once the pendulum shifts back, we believe it will shift quickly and prices will likely rise at a torrid pace,” he wrote.
We were curious today what was the effect of Japan’s announcement on uranium equities so we tallied changing shareprices of some of the usual suspects in the uranium sector below, from close February 24 before the news of Japan’s policy came out, to mid-day February 26. The response was unanimous. All uranium stocks we looked at appreciated, on average by about 13 percent over a day and a half of trading and on volumes that were much higher, generally, than usual. Among producers, Paladin jumped most, up 21 percent, followed by Denison Mines, up 17 percent. Industry leader Cameco was up 11 percent.
|Company||Ticker||Close Feb. 24||Presstime Feb 26*||Change|
|Uranium Participation Fund||U||$5.59||$5.74||3%|
|*12:40-12:50 EST||Average Increase:||13%|