Uranium Outlook 2016 - Supply Deficit in the Cards

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

Date posted: 12/02/15

Kristen Moran opines that for 2015, experts and analysts forecasted average uranium spot prices of US$40 per pound and long-term prices in the US$58 range. However, with only a few short weeks left in the year, prices remain low. Uranium spot prices have averaged US$37 in 2015, whereas long-term prices have checked in at an average of $46.50. With almost all other commodities off so sharply in 2015, perhaps we should feel fortunate that uranium prices rose 2% year-to-date, from US$35.25 per pound to US$36 per pound, Dundee Capital Markets senior analyst David Talbot told the Investing News Network. There were signs of recovery earlier this year, but that stalled and the spot market continues to have excess supply. He added that the term market is even more difficult to predict ... only 80 million pounds U3O8 were contracted compared to over twice that much consumed this year. We still need utilities to return to contracting to see some firming in prices, which should happen as 2017 approaches. But until then, we expect both spot and term prices to remain somewhat stagnant in the absence of any catalysts. Talbot said quite a few drivers contributed to ambitious 2015 price outlooks, including supply disruptions at Olympic Dam and Rossing and the Russian Ukraine fallout, which seemed to dissipate after a tense Q1 2015. Ongoing Japanese reactor restarts also played a role, as did the Chinese resurgence, which is gaining momentum and, notably, is starting to go external as China begins to sell reactors, services and financing abroad. However, ultimately those factors did little to move uranium prices. One key element that kept prices suppressed during 2015 was the lack of buying by U.S. utilities. Despite an estimated 15 to 20% of uncovered requirements, many utilities refrained from buying uranium due to excess inventories. In the shorter term, it will likely be U.S. utilities that boost uranium prices as contracts are expected to open up late next year.