Kalyan Kumar reports that uranium, the main raw material used in nuclear reactors for energy production had been experiencing depressed prices since the tsunami in Japan in 2011. Among commodities, uranium was the worst-performing in 2016. Downcast prices made the raw material unprofitable to mine for many producers. But things are changing. The raw material is back in the reckoning as high demand scenario is emerging with looming supply shortage. Miners have cut output and new nuclear plants are commanding a spike in demand, according to Uranium Energy Corp, reports Bloomberg. David Wang, a well-respected analyst at Morningstar said uranium price will more than double to about $65 a pound by 2019 from $28.25 now. We are all surprised by how low it has reached, especially considering the bright prospects going forward, Wang said in an interview, but this situation represents true supply-demand issues.
At present, world nuclear reactors consume 174 million pounds of uranium a year. But that demand is expected to increase drastically with 20% of it as extra demand from hundreds of new reactors coming up in various countries over the next few years. In the last couple of years, the market was grappling with the oversupply pangs caused by the highly productive mines in Kazakhstan, Canada, and Australia. That led to a heavy drop in prices by an average 18% in the futures markets. Among the 80 commodities tracked by Bloomberg, Uranium faced the biggest loss. It will mean stockpiles getting exhausted and slump reversing into scarcity, noted Amir Adnani , CEO of Vancouver-based Uranium Energy. To spruce up prices, his company has cut production and further expansion. Uranium Energy has idled its Palangana mine and Hobson plant in Texas. It also kept on hold other projects in Texas and Paraguay.
Original URL: http://www.fxnewscall.com/uranium-rally-to-lift-prices-new-demand-exhausting-supply-glut/1941312
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