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Fitch : Uranium Prices May be Under Pressure Until Next Decade

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01/28/2016 | 03:50am EDT

28 Jan 2016 3:35 AM EST

Link to Fitch Ratings' Report:Uranium Mining - Prices to Remain Under Pressure

Fitch Ratings-Moscow/London-28 January 2016: 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.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Endorsement Policy - Fitch's approach to ratings endorsement so that ratings produced outside the EU may be used by regulated entities within the EU for regulatory purposes, pursuant to the terms of the EU Regulation with respect to credit rating agencies, can be found on the EU Regulatory Disclosures page. The endorsement status of all International ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for all structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.

Fitch Inc. issued this content on 28 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 28 January 2016 08:49:16 UTC

Original Document: https://www.fitchratings.com/site/fitch-home/pressrelease?id=998506

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