Japan's possible reactor restarts to trigger uranium rebound

Uranium may rebound from a second annual decline as Japan considers restarting its atomic plants.

The price of the fuel for immediate delivery may average $55 a pound (0.45 kg) in 2013, according to the median of five analyst estimates in a Bloomberg News survey conducted last month.

The nuclear fuel slipped 14 percent to an average of $48.72 in 2012 and traded at a three-year low of $40.65 in November, data compiled by Bloomberg show. It was $43 a pound on Jan. 3.

A revival in demand from Japan is raising the prospect that supplies of the radioactive metal will shrink at the same time as China continues with a project to increase its nuclear power capacity at least fivefold by 2020.

"The biggest pressure on price at the moment is not necessarily the downgrade to demand since Fukushima, it's this massive inventory overhang," said Joel Crane, vice president of research at Morgan Stanley in Melbourne.

"Should the Japanese government give the green light to restarts, that overhang is instantly gone and that will be very positive for prices."

The uranium forecasts for 2013 ranged from $45 to $62.60 a ton in the Bloomberg survey conducted from Dec. 10 to 19.

The price plunged as low as $49.75 a ton in March 2011 after the offshore 9.0-magnitude earthquake rocked Japan. The subsequent tsunami damaged reactors at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear plant, releasing radiation and causing the evacuation of 160,000 people.

Japan's new administration plans to establish a variety of sources for electricity generation within 10 years and will review the plan to exit nuclear power, trade minister Toshimitsu Motegi said Dec. 28.

"We can't say for sure that Japan will be free of nuclear power by the 2030s," Motegi said at a news conference in Tokyo. "We will make our decisions based on technological findings and not with prejudgment."

China has 14 reactors operating and the new ones planned, accounting for more than 40 percent of the plants being built globally, may increase the nation's capacity to 60 gigawatts by 2020, according to the World Nuclear Association.

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