• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 2 hours Oil prices going Up? NO!
  • 1 day Could Venezuela become a net oil importer?
  • 6 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 2 hours Tesla Closing a Dozen Solar Facilities in Nine States
  • 15 mins Renewables to generate 50% of worldwide electricity by 2050 (BNEF report)
  • 4 hours Could oil demand collapse rapidly? Yup, sure could.
  • 1 day Gazprom Exports to EU Hit Record
  • 38 mins Oil prices going down
  • 1 day EU Leaders Set To Prolong Russia Sanctions Again
  • 1 day Why is permian oil "locked in" when refineries abound?
  • 1 day Oil Buyers Club
  • 2 days Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 50 mins Saudi Arabia turns to solar
  • 1 day EVs Could Help Coal Demand
  • 2 days China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 18 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
Alt Text

Rising Costs Slow The Growth Of Nuclear Power

High costs and public fears…

Alt Text

Scientists Are One Step Closer To Nuclear Fusion

Colorado State scientists have just…

Alt Text

Nuclear Power's Resurgence In The Middle East

While nuclear power loses popularity…

MINING.com

MINING.com

MINING.com is a web-based global mining publication focusing on news and commentary about mining and mineral exploration. The site is a one-stop-shop for mining industry…

More Info

Trending Discussions

Are Higher Uranium Prices Around The Corner?

Nuclear

The announcement made by uranium giant Cameco in November  that it’s suspending operations at its flagship McArthur River mine in northern Saskatchewan and surprisingly deep three-year cuts by Kazakhstan’s state-owned Kazatomprom  provide a "step change" for uranium prices says a new report on the sector from Cantor Fitzgerald equity research.

On Monday, the world largest producer of uranium, surprised the beleaguered market with a larger than expected cut to production of its own.

Two weeks ago, Kazakhstan’s state-owned Kazatomprom announced intentions to reduce its output of U3O8 by 20 percent or 11,000 tonnes (around 28.5m pounds) over the next three years beginning in January 2018. According to the company roughly 4,000 tonnes will be cut in 2018 alone "representing approximately 7.5 percent of global uranium production for 2018 as forecast by UxC."

Cameco's shuttering of McArthur River for ten months is expected to reduce production by 13.7m pounds in 2018 translating to a combined 42.3m pounds of expected production that has been removed from the market. In 2018 alone, the reduction will be about 24.1m pounds of U3O8 or about 15 percent of Cantor Fitzgerald's prior forecast of 158.4m pounds of output.

Utilities have shored up what were once large shortages through spot purchases or short-term contracts

Rob Chang Managing Director and Head of Metals & Mining at Cantor Fitzgerald, said Cameco and Kazatomprom have introduced a "supply shock" that will lift uranium prices that dipped below $20 a pound in September. Related: Aramco’s “Acquisition Hit List”

We expect these events to ultimately push spot uranium prices to the mid-high US$20/lb range and perhaps into US$30/lb. However, as seen so far, the degree of movement may be muted at first due to fact that there are a limited number of qualified purchasers of uranium – making it a less efficient market.

We estimate that less than 10 percent of total uranium demand for 2018 and 2019 are uncovered, as utilities have shored up what were once large shortages through spot purchases or short-term contracts. As such, there is less of an impetus for utilities to make purchases immediately.

Inventory levels are also a concern as we estimate that there are 800-1,200M lbs of total above ground inventory of which about 700-800M lbs are held by utilities. We do not believe that all of it is available for sale as significant portions are held for strategic purposes and necessary utility needs. Moreover there is the possibility of sales from distressed utilities and by utilities with reactors that are being decommissioned.

Nevertheless, we view the announcements by Cameco and Kazatomptom to be a positive supply shock that has produced a step change in the spot price of uranium at (and later above) the mid-US$20/lb level.

Last week the nuclear fuel was pegged at $24.40 a pound and Chang now views the mid-$20s as a "floor price for spot U3O8 to move higher from." In 2018 Cantor Fitzgerald predicts a price of $31.25 a pound, a 25 percent upward adjustment to the researcher's earlier view. Prices will gain in 2019 and by 2020 retake the $40 level. Long term pricing of $80 a pound remains unchanged.

By Mining.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Clyde Boyd on December 24 2017 said:
    So the stock broker likes supply shocks because it manipulates the market. Now wonder most people hate stock brokers.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News