I’m not well versed in the energy sector, but my understanding is that nuclear plants have been shut down and construction projects halted because they just aren’t profitable once construction and refitting costs are taken into account. Given decreasing renewables costs and fairly stable oil, why would uranium become a hot commodity?
Is this the market being irrational, or am I totally out of the loop?
Seems like a high level trump trade based on the belief that the administration may be more open to investing in nuclear. I think exploding is the wrong word, the uranium stock index is up 33% since November, but that was an all-time low for that sector. The sector is still well below it’s average in each of the past three years and much of that boost could have come from alleviated credit concerns. Over the same period, returns have been about that strong throughout much of the industrial and commodity complex so I’d look at this as mostly a beta move. Uranium itself is trading around $23 below averages of $26, $37 and $34 in 2016, 2015 and 2017 respectively.
Anyhow, I agree that the long term outlook hasn’t changed, but you could say that about a lot of the market performance recently.
Uranium hasn’t recovered from Fukushima. I took a flyer on it about six months after the quake thinking it was kind of a big knee-jerk reaction to nuclear power. I was wrong.
Too bad considering nuclear is perhaps the best option for energy. Plants are clean and give off far less radiation than coal. Environmental twits can’t wrap their minds around nuclear being safe…well, unless you get hit by a tsunami.
The economics don’t make sense. If the economic rationale were there, believe me they’d find a way.
-The benefits to nuclear power lie in the power stability and reduced carbon emissions. On a levelized cost basis over the life of the asset including CAPEX and operational costs, nuclear power has been shown to have the highest USD cost per megawatt hour over the life of the asset, even relative to solar and wind power. This is a major downside that is hard to get around, particularly when combined with the inflexibility of the technology, high initial CAPEX and long service life that you are essentially married to.
Interesting.
Someone just needs to build a better mousetrap. But, there’s not much incentive to invest in more efficient nuclear power if you have multiple government bodies in multiple countries fighting you along the way.
Edit: Or we could just go right to cold fusion.
https://www.nytimes.com/2017/03/29/business/westinghouse-toshiba-nuclear-bankruptcy.html?_r=0
Westinghouse going under and weakening the nuclear industry with it.
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