Uranium turns a corner as demand rebounds

Sydney: Uran-ium prices are set to rebound after their worst year since 2008 as a looming supply deficit coincides with rising demand from China and India.

The price may rally 15 per cent to $60 a pound this year after slumping 17 per cent last year as Japan's atomic generation shrank following the March 11 earthquake and Fukushima Dai-Ichi disaster, according to the median of five analyst estimates in a Bloomberg survey. Prices may rise to $65 a pound and possibly as high as $75, according to Marshall Berol, a manager of the Encompass Fund in San Francisco.

"It will be a year of recovery post-Fukushima, as people recognise that the nuclear-energy industry is not going away, that it's not fading into the sunset," said Berol, who helps manage $300 million in assets, including shares in Cameco Corp., the world's largest uranium producer, and BHP Billiton Ltd.

China, the world's biggest energy user, needs to fuel a potential 100 atomic reactors by 2020, and has joined Saskatoon, Saskatchewan-based Cameco and Rio Tinto Group in seeking uranium assets.

Prices of about $80 are needed to make new developments attractive to investors, which may lead to a supply deficit as projects are delayed, according to JPMorgan Chase & Co.

Uranium fell to $52 a pound last year, reversing a 40 per cent gain in 2010 after the Fukushima crisis.

Germany said in May that it would close all its reactors by 2022 and China suspended new nuclear projects pending a review.

The price of the radioactive metal dipped 16 per cent in 2009 after decreasing 41 per cent in 2008 and peaking at $136 in 2007, according to data provided by Ux Consulting Co.