Uranium prices fell to long-term lows today with the front-month futures contract at the lowest since at least 2007.
The FX market underestimates the importance of the planned restart of nuclear energy stations in Japan for the yen. The country is currently importing massive quantities of coal and fuel to power the national grid. Prices have risen more than 20% and will continue to rise until the government deems its reactors fit for service.
The fall in uranium prices today comes after producer Cameco said they don’t expect price improvement in the near to medium term.
A switch back to nuclear would curb the Japanese trade deficit and boost the yen, it would also make domestic companies more competitive because of cheaper energy.
What the market is saying, however, is that even though Japan’s ruling Liberal Democratic Party government approved a new energy policy earlier this month, the process will be slow.