Official targets state China's nuclear power plant (NPP) capacity will increase from 9 GWe in 2009 to 75 GWe by 2020; potential for NPP capacity to reach 120 Gwe

Eoin Treacy's view China's voracious appetite for energy has led to numerous upgrades of its nuclear reactor construction plans over the last decade and these show no sign of slowing. Long-term demand for uranium to fuel these reactors remains on a steady upward trajectory despite the reduction in energy demand that accompanied the global recession. While there is currently no shortage of yellow cake, it is by no means certain that the necessary capital is in place to ensure supply growth keeps up with demand over the medium to longer term.

Uranium prices have been ranging above $40 since early 2009 and have acquired a distinct positive bias over the last few months, resulting in the 200-day MA turning upwards. While a sustained move above $60 will complete the developing base, a sustained move below $43 would be required to question current scope for higher to lateral ranging.

With China not only building reactors but also aiming to do more of the work themselves, it might be instructive to look at some of the shares which are part of China's reactor building sector.

Shanghai Electric Group has been ranging below HK$4 for much of the last two years and broke upwards last week. A sustained move below HK$3.75 would be required to question scope for further upside.

Harbin Power Equipment found support near HK$5 in July and has since rallied impressively to test the 2009 highs near HK$10. It is now overextended in the short-term but a sustained move below the 200-day MA, currently near HK$7 would be required to question medium-term upside potential. This should not be confused with the US listed ADR Harbin Electric.

Dongfang Electric Corp remains in a relatively consistent, although increasingly overextended, medium-term uptrend. While it might be expected to consolidate in the region of the 2007 peak near HK$40, a sustained move below HK$28 would be required to question medium-term upside potential.

Guangdong Electric Power (Shenzhen B-Share) has been ranging above HK$4 since mid-2009. A sustained move above HK$5 would be required to reassert medium-term demand dominance.