Uranium Price Flat as Market Watches Japan and China ...but

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 07/20/15

Investing News reports that the summer slowdown has set up camp in the uranium market, with the price remaining unchanged at $36.50 per pound of U3O8 for the last few weeks. However, it seems that market players at last believe the bottom has hit. Raymond James analyst David Sadowski said in a recent note to clients that uranium producers are down 25 percent, while uranium juniors are down 23 percent. That being said, he sees a limited downside from current equity valuations and good potential for out performance over the balance of the year as the stocks play catch-up and benefit from recovering sentiment and underlying commodity prices. Sadowski believes that given high uncovered utility needs and the uranium shortage expected by roughly 2020, the price could rise to $38 per pound of U3O8 in the second half of 2015. The uranium price could then reach $45 per pound in 2016 before hitting a longer-term price of $70 per pound. Sadowski sees $70 per pound as the price required to stimulate mine supply to meet future demand. All of those factors point to a quiet summer for the uranium market, but now and in the coming months investors should nevertheless be on the lookout for milestones from the usual suspects: Japan, China and utilities. In terms of Japan, World Nuclear News reported last week that nuclear fuel was being loaded into Kyushu Electric Power Company Sendai 1 reactor. The fact that Kyushu has been granted a green light to refuel the reactor is a positive indicator for all uranium companies, according to Sadowski. The reactor could start up sometime in August following a month-long inspection. The country is aiming to have roughly 35 reactors online by 2035, with 11 back online by 2016. Outside Japan, reactor restarts in China are urging along rising uranium demand. So far this year, four reactors have started up, with a further eight expected by the end of the year. Sadowski estimates that by 2025, China will surpass the U.S.current demand.