Uranium Outlook 2017 - Experts Expect a Slow Recovery

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

Date posted: 12/28/16

Jocelyn Aspa reports that uranium industry leaders indicate that despite demand from China potentially doubling to 9,800 metric tons annually by 2020, the uranium price has decreased significantly in 2016, dropping to its lowest levels in over 12 years, sitting at $18.75, as of December 12, 2016. Chang expected a price recovery in 2016, but he was wrong. The impact of the carry trade to satisfy emerging uncovered requirements was much stronger than anticipated. Another leading analyst, Bruneton, agreed with Chang, noting that he was not expecting such a fall in the uranium price. In that regard, there were, of course, a number of factors contributing to the drastic price drop. While it is not unique to 2016 only, FocusEconomics noted in their December 2016 Consensus Forecast Commodities Outlook that the market has not been able to recover from the Fukushima shutdowns and slow re-starts of the reactors in Japan. In terms of supply, the largest miner of uranium in the world, Cameco announcement in April (2016) that it would be halting production at its Rabbit Lake mine, the longest-running uranium mine in Saskatchewan, has no doubt impacted the industry. The company had previously set a target for production in 2016 at 30 million pounds of uranium, which has since changed to 25.8 million pounds. Chang, Cantor Fitzgerald, believes prices will be flat to slightly higher in 2017, as the carry trade continues to push emerging uncovered demand forward by a year or two. But, he added, as interest rates rise and increasing percentage of global uranium requirements become uncovered, there will be a point where the carry trade will not be able to satisfy the demand. Utilities will be forced to enter into the spot market more aggressively to satisfy their needs, Chang said. This will kick off the violent price increase we have been expecting. On the other hand, Focus Economics expects the uranium price to pick up in 2017, averaging $33 per pound in the 4th quarter 2017.