Even Higher Uranium Prices Ahead This Summer, Part Two
By: James Finch | Posted: 12th June 2006
What about going into Russia's G8 summit? It appears uranium trading through June could continue to show a very tight supply situation, where sellers continue to set pricing. A recent posting on the Trade Tech LLC website announced the following:
"A number of buyers concluded transactions during May, which significantly reduced outstanding demand. The impasse between buyers and sellers ended this past month, with buyers apparently reconciling their expectations with recent price increases and current offers. Sellers moved increasingly toward market-related pricing terms for spot delivery, and buyers showed a renewed willingness to accept these offers. Exceptionally strong long-term demand continues to exert upward pressure on the spot uranium price as each pound held by sellers is considered more valuable with every new buyer that enters the market. At least one, and possibly two, uranium auctions are expected in June. Buyers are expected to compete aggressively for this material and TradeTech expects uranium prices to continue their upward climb in June."
Aggressively competing for tight uranium supplies lends credence to a possible rise through the $50/pound level before this month ends.
NUCLEAR EXPANSION: A WORLDWIDE PHENOMENON
Yuri Sokolov, Department Head of Nuclear Energy for the United Nation's International Atomic Energy Agency (IAEA), told reporters this past week, "There is plenty of uranium assuming the industry keeps moving ahead with exploration and new mines." Sokolov is confident the "identified resources" of 4.7 million metric tons can be mined for less than $60/pound. But there was a warning buried in his speech. He cautioned that the major risk to uranium supplies would come from possible delays in moving from discovery to production. Industry insiders understand it can take between 12 and 20 years after a discovery to reach the production stage.
Sokolov also set targets in the IAEA's annual Red Book. Depending upon how quickly the nuclear industry expands, more uranium will be required. By 2025, if global nuclear capacity increases to 22 percent, utilities will need 80,000 metric tons per year. An increase to 43 percent would require 100,000 metric tons annually. The Red Book forecast new mines, over the next five years, would add about 30,000 metric tons to the supply inventories. This new capacity would fill the current uranium supply shortage. More new mines would need to come online to keep pace with the heralded nuclear renaissance. Only the most cynical industry insiders would disagree that the uranium mining sector desperately needs a dramatic surge in production between 2010 and 2020 to match the explosive growth ahead for this sector.
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James Finch contributes to StockInterview.com and other publications. You can get his free updates by visiting http://www.stockinterview.com. Please write to James Finch at jfinch@stockinterview.com with your questions.
The quote in this article from TradeTech LLC can be found on their website: http://www.uranium.info
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James Finch is a contributing editor for StockInterview.com and other publications. http://www.stockinterview.com
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Tags: industry insiders, production stage, worldwide phenomenon