Jocelyn Aspa reports that the uranium price has seemed to be on its way to a recovery. Kazakhstan plans to cut production buoyed the sector, and as of February 1 uranium was at $26.68 per pound, up 32% year-to-date. However, more recently the uranium price has slid back, and as of February 20 it stood at $24.50.
Given the uranium market underlying fundamentals, its inability to rally is not unexpected. The 2011 Fukushima incident has pushed the commodity into oversupply, and uranium inventory currently stands at about 1.4 billion pounds worldwide, according to UxC.
Global uranium demand is much lower ... it is estimated at 173 million pounds a year. Put simply, there is currently enough uranium supply to last many years, the Economic Calendar states, which adds that the demand side of the equation will improve, eventually, with dozens of nuclear reactors around the world under construction and even more in the planning phases.
But currently a significant price rise is premature for a big rally. After the last week price retreat buyers now know that they still have the upper hand when it comes to price negotiations. In the coming weeks, pending any significant fundamental changes, spot uranium prices will likely drift lower, with their only support coming from the already planned production cuts.
Similarly, the FocusEconomics February 2017 Consensus Forecast Commodities Update also suggests that uranium supply will ease as more nuclear reactors become operational and production cuts occur. It is calling for the uranium price to average $29.90 per pound in Q4 2017, and sees it picking up to $36.4 per pound in Q4 2018.
In short, while an improved uranium price is not guaranteed in the near term, it is now looking increasingly possible that it could come sooner rather than later.
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