Uranium Market is Getting Crushed

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

Date posted: 04/23/16

Frik Els reports that the uranium market is having the worst start to a year in a decade. U3O8 is down more than 25% in 2016 with the UxC broker average price sliding to $25.69 a pound on Friday. That is the cheapest uranium has been since May 2, 2005. Haywood Securities in a research note points out that the spot U3O8 price saw three years of back-to-back double-digit percentage losses from 2011-13, but none worse than thus far in 2016, and at no point since Fukushima, did the average weekly spot price dip below $28 a pound. The long-term price, where most uranium business is conducted, is languishing at around $44 a pound. Uranium was actually the best performing commodity in 2015 by virtue of having declined in value only slightly over the course of the year. So what is happening? Els indicates that Vancouver-based Haywood attributes the decline to a lack of non-discretionary buying from utilities combined with an over-supplied market which continues to inflate global inventories, partially attributable to the continued shutdown of Japanese reactors and the ramp-up of production at selected uranium mines including Cigar Lake in Canada. Five years after the Japanese disaster only two of their 50 nuclear reactors are back on line. In other developed markets, nuclear power is also in retreat. The last new nuclear power station to enter service in the U.S. was 20 years ago. Top user France which relies on its 58 plants for more than 75% of its electricity needs, may begin a program to reduce that figure to 50%. Problems with next-generation plants developed by French state utility EDF and top supplier Areva are well-documented. Germany is trying to phase out the technology, and the last new nuclear power station to enter service in the U.S. was 20 years ago, although others are under design and construction. Prospects for new reactor build are very different in China (22), India (6), Russia (8), and Middle East (4), etc. other parts of the world.