In general, commodities prices began to rally at the beginning of Q2 after hitting rock-bottom in Q1 (2016), raising the question of whether this represents a turnaround in the downward trend that began in Q3 2014 or just a temporary increase. Analysts agree that while commodities prices are unlikely to undershoot the lows registered at the beginning of 2016, the formation of bottoms could occur in the coming months. The Consensus view, however, is that the nascent recovery is here to stay, but its pace is expected to be slow and uneven across different commodities. Re Uranium (page 22), the uranium market remains oversupplied due to excess inventories, thus putting downward pressure on prices. However, a depletion of stockpiles coupled with the construction of new reactors, particularly in countries such as China, India and Russia, will boost prices going forward. Panelists expect uranium prices to increase in the medium term due to higher global energy demand.
They project prices to average USD 39.7 per pound in Q4 2016 and see prices picking up over the course of 2017 to an average spot price of USD 44.8 per pound in Q4. Factors influencing prices now ...
1. Total uranium mine production
2. China has secured long-term contracts with Kazakhstan
3. New nuclear reactors and increase in nuclear capacity in China, India, Russia, Middle East, U.S., etc.
4. Steady increase in demand for electricity in U.S. and worldwide
5. Russia stopped selling uranium at market prices Factors also influencing prices in the future...
6. Discovery of large, high-grade uranium (and rare-earth deposits) in the Athabasca Basin in Canada
7. Discovery or development of uranium resources in South America and Africa
8. Trend toward nuclear power replacing natural gas, coal and solar and wind in U.S. (California, Washington, etc) and Europe (UK, France, etc)
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