Uranium Outlook 2017 - CEOs Expect a Better Year

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

Date posted: 12/30/16

Jocelyn Aspa, a few days later than a previous report, indicates that industry leaders look back and then plan for the future. The spot price erosion was primarily due to sellers desperation and underfeeding. Sellers desperate for cash including traders unwinding positions and producers needing to pay their bills with sellers insensitive to price like the U.S. DOE dumping some of their uranium stockpiles to fund legacy clean-up operations. Underfeeding where uranium enrichment suppliers become essentially uranium producers was also an issue because the demand for enrichment services is also less than capacity with most of Japan reactors not online yet. The continued weakness in the spot uranium price has been a significant weight on the sector. The spot price is a largely irrelevant data point. However, the impact has been that few long-term contracts have been written and the spot price is being factored into those negotiations with producers. This has in turn seen significant production cuts both undertaken and planned. For uranium, you can sense the bottom is here. No producers can make money at current spot uranium price and demand will continue to increase due to new reactor builds and more re-starts expected in Japan. Existing and future producers are starting to contract again, at above $40 per pound prices, which is well above both the published spot, and term uranium prices Some CEOs suggest that leading indicators are pointing to a resurgent bull market. The downturn has seen little investment in new supply and less in exploration than should have been and this coupled with an improving global outlook for business growth suggests that a bull market that may be around the corner and could put the last one in the shade. The Trump administration will be much more nuclear power friendly. The market is now acknowledging that with some simple changes to the laws, the U.S. nuclear power industry can undergo a renaissance without compromising safety.