Uranium prices are flat but on verge of increases
Analysts see price inflation ahead as demand grows
By Tom Stundza -- Purchasing, 9/17/2008 10:02:00 AM
The spot uranium price has remained unchanged at $64.50/lb for nine weeks in a row, according to uranium consultants Trade Tech, as spot demand has remained extremely weak. Meanwhile, analysts at RBC Capital Markets, in their latest quarterly update, predict average annual prices in the range $70-90/lb over the next decade.
The analysts believe that supply will match demand in 2009 and afterwards as long as yellowcake producers supplement their feedstock supply with secondary (i.e., recycled scrap) material. That’s important, since the Nuclear Energy Institute says 17 companies and consortia are pursuing licenses for more than 30 nuclear power plants in the U.S. and that the Nuclear Regulatory Commission has begun reviewing the first wave of applications.
So, RBC Capital Markets anticipate that uranium sales prices will be high (relative to historic levels) for many years to come. “Prices will be supported by relatively positive demand fundamentals (averaging 3.9% annually) as nuclear power is now considered to be a relatively inexpensive and clean method of electricity generation,” says the report.
The analysts say prices also will be supported by supply shortfalls caused by delays in bringing new mines on stream and by problems with existing mining and smelting operations. Cameco, the world’s largest producer, for example has recently lowered its production target for 2008 by a million pounds because of infrastructure delays and shortages of sulphuric acid. So, RBC Capital Market analysts don’t see why the supply problems which have plagued the industry in recent years should disappear.
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