How uranium stocks could make U-turn as Japan edges closer to...

How uranium stocks could make U-turn as Japan edges closer to restart nuclear reactors
Thursday, February 27, 2014 by Proactive Investors

Uranium stocks make U-turn as Japan moves to restart nuclear reactors
Uranium stocks across world markets lifted off yesterday after Japan revealed a pro-nuclear energy plan involving the restart of Fukushima reactors, left dormant following damage caused by the 2011 Tohoku earthquake and ensuing tsunami.

The Japanese government released the anticipated draft of its Basic Energy Plan, which committed to nuclear power as a central source of Japan’s ongoing energy requirements.

Cabinet approval for the proposition is anticipated in weeks, and should pave the way for many of Japan’s 48 idled reactors to resume operations prior to year's end.

Prime Minister Shinzo Abe’s proposal also touched on the possibility of new reactors being constructed.

Abe was elected prime minister in 2012, and began implementing new safety standards that established a socio-political environment in which production of nuclear energy could recommence.

On the ASX, small cap uranium stocks stirred then flew, with Peninsula Energy (ASX:PEN) trading record volumes during its climb to $0.028 intraday from Tuesday's closing price of $0.023.

Paladin Energy (ASX:PDN) rocketed to $0.575 intraday, from $0.43, while Toro Energy (ASX:TOE) jumped to $0.08, from $0.069.

The Ian Middlemas-backed Berkeley Resources (ASX:BKY) was another star, surging to close on its day high of $0.37, from $0.29.

Cauldron Energy (ASX:CXU) could be another to watch over coming days, boasting a 15.7 million pound uranium resource in Western Australia.

Several commodity analysts have tipped uranium to outperform over the coming years, and Japan's announced pro-uranium energy strategy is likely the catalyst that will bring those forecasts to fruition.

Uranium prices will remain leveraged to the news of the Japanese reactor restarts and a return to term contracting by utilities.

The long-term outlook on the uranium market is tipped to remain the same at US$65/pound ($65/lb) U3O8. The uranium price has dropped significantly and now appears stable at levels not seen for almost eight years.

With some analysts forecasting a $42/lb price estimate for the year, with prices to about $48/lb by Q4/14 it could be time to look at uranium stocks again.