(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Uranium Mining â Prices to Remain Under Pressure
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875664
MOSCOW/LONDON, January 28 (Fitch) Uranium spot prices are likely to remain under
pressure for the rest of the decade due to very high inventory levels, recycling
of already-mined uranium and the slow restart of Japan's nuclear reactors, Fitch
Ratings says.
Spot prices for U3O8 have been fluctuating around USD35/lb and we do not expect
them to recover to USD50 for several years. In the longer term, low uranium
prices are likely to lead to more mining project cancellations and delays, which
may result in undersupply after 2020, driving prices up.
Uranium prices have been falling since 2011, when the Fukushima disaster caused
the Japanese authorities to shut down all 52 of the country's reactors and
prompted the German government's decision to phase out its nuclear power by
end-2022. The first two Japanese reactors came back online in the second half of
2015, but progress to restart other reactors may remain slow.
The extended period of oversupply also contributed to a big build-up in
utilities' uranium stockpiles, with European utilities having enough fuel to
last three years and Japanese utilities enough for four to five years. These
stockpiles will help maintain pressure on prices as demand slowly recovers.
Secondary sources of previously mined uranium, such as reprocessed nuclear fuel
and "blended-down" highly enriched uranium from dismantled nuclear warheads will
also continue to weigh on prices.
Kazakhstan-based Uranium One (BB-/Stable) and Kazatomprom (BBB-/Stable) are
likely to continue to outperform their peers on a cash-cost basis in this
low-price environment, cementing Kazakhstan's position as the world's largest
uranium producer.
Long-term prospects for uranium remain positive and we expect demand to rise by
nearly 45% by 2030, with China, India and Russia the main sources of net new
global capacity.
For more information on our expectations for uranium and our production outlook
for the main uranium miners, see the report "Uranium Prices May Remain Under
Pressure Until 2020" published today and available at www.fitchratings.com or by
clicking the link above.
Contact:
Maxim Edelson
Senior Director
Corporates
+7 495 956 9986
Fitch Ratings CIS Limited
26 Valovaya Street
Moscow 115054
Oxana Zguralskaya
Director
Corporates
+7 495 956 7099
Simon Kennedy
Director
Fitch Wire
+44 20 3530 1387
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email:
peter.fitzpatrick@fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market
commentary page. The original article can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
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