Henry Lazenby reports that an emerging 15% supply gap could signal a prolonged upturn in the uranium price through to 2024, Canadian uranium major Cameco said on Thursday. A decline in secondary sources of yellowcake was forcing the market to increasingly rely on primary suppliers, which, when coupled with unprecedented growth in the nuclear reactor industry, foretold improved market conditions over the medium and long term, investor relations director Rachelle Girard told the Cantor Fitzgerald Annual Global Uranium Conference, in New York.
NYSE- and TSX-listed Cameco expected the market to expand at 4% a year to about 230-million pounds of uranium oxide a year by 2024, a far cry from current output of about 140-million pounds, excluding projects under development. The company was the largest publicly traded uranium producer and owned and operated the largest uranium mines in the prolific Athabasca basin of Saskatchewan, from which the company produced about 16% of the global supply. Worldwide, about 63 new nuclear reactors are under construction, but the insatiable need for electricity could see a further 81 more nuclear reactors come on line in the foreseeable future. The global uranium market had been stumped by March 2011 Fukushima Daiichi nuclear plant damage caused by tsunamis and poor planning, which prompted all nuclear reactors to be shut down in Japan.
The natural-disaster induced crisis had created significant global uranium market backlash and public opinions about the safety of using nuclear-derived power took a beating. This had eroded demand and caused a global supply glut, as the Japanese nuclear fleet remained largely offline. Girard said Cameco was currently looking to lock-in future contracts, but noted that the market was not currently entertaining new contracts, as high inventories and the soft demand were affording buyers the opportunity to wait and see whether prices would fall further.
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