Rally in Uranium Prices Is Unlikely to Last

Uranium (Nuclear Minerals) / Nuclear Power - Economics, Design, & Industry

Date posted: 09/14/14

A multiweek rally in uranium prices fanned by the Ukraine conflict and labor unrest at a large mine in Canada looks unlikely to continue for long as the reality of oversupply and lackluster demand sinks in among buyers of the nuclear fuel. Industry analysts and some uranium producers believe that even as supplies fall, a substantial increase in demand is needed to drive prices up to levels that would make new investments worthwhile, when many operations are running at a loss.\n\nUranium prices have surged 15 per cent since the start of August, shaking off a multi-year, glut-induced slump. A gauge of more than 20 commodities, meanwhile, dropped more than 4 per cent. Uranium now trades at 32.75 US dollars a pound, up from a nine-year low of 28.00 in May. The gain was fueled partly by speculation that Western sanctions against Russia over its conduct in Ukraine could squeeze supplies. Russia produces only 5 per cent of the world uranium but is a leading provider of enrichment services to many Western utility companies. Prices also surged after production was interrupted by a labor dispute at Cameco Corp, McArthur River operation, the world largest uranium mine, in Saskatchewan, Canada.