Setting a breath-taking pace, Uranium is shattering one record after another on its relentless ascent into heady, triple-digit terrain. Last week the spot price climbed to $113.00 per pound. Where's it headed?
Julie Ickes reports in Uraniumstar.com that “the spot uranium price has risen by 57 percent” since the beginning of 2007. “In January 2001, spot uranium could be purchased for as little as US$6.40. Since then, it has jumped “more than 1700 percent!” According to Gene Clark, chief executive of TradeTech, which publishes Nuclear Market Review, “We are about $2 short of the all-time high in inflation-adjusted dollars.”
Runaway prices are being fueled by a classic showdown between demand and supply. There is simply not enough uranium available to meet the mushrooming demand from the nuclear power industry. Flooding at Cameco’s Cigar Lake Project and Energy Resources of Australia’s Ranger Mine have severely limited production and contributed to the growing shortfall.
An auction in the U.S. last Wednesday for 100,000 pounds of yellowcake (industry slang for processed nuclear fuel) set the latest benchmark according to Mandi Zonneveldt, Uraniumstar.com: “The bidding came as Australian uranium producer Energy Resources of Australia warned that wet weather would hamper its production for at least a year. “
How much more upward momentum remains in uranium’s wild ride? From Resource Investor.com, Neal Froneman, president and CEO of SXR Uranium One, said in an interview (April 10) that “he anticipates global demand for uranium to increase by 2.5% annually over the next decade. He predicts prices will rise to US$150 per pound by the end of 2007.”
At Doug Casey's Uranium Stock Summit in Las Vegas this week, analyst Kevin Bambrough of Sprott Asset Management said that his company has already exited some of its uranium holdings because they have gotten too popular. He said he believes uranium prices will top out in the next 12 to 18 months.
Peter Grandich, in The Grandich Letter (April 7), offers his assessment. “My target of $100 is upon us. It’s still hard to see why it can’t go higher but I feel we’re more than halfway through this bull market. It’s not yet time to abandon ship, but one should be very selective going forward and not to be afraid of lightning up too early. I am sure you would rather end up being a year too early versus a day to late. We can still see $125+ but I would sooner see it stay around $100 for the balance of the year.”
Resource Capital Research recently predicted the price would touch $US125 a pound this year and rise as high as $US140 a pound in 2008.
J. Taylor writes in his newsletter, Energy & Energy Tech Stocks (April 11) sees no slowdown ahead in the fast rising price. “A few industry forecasters are suggesting that uranium could rise to as high as $500 per pound before it would render nuclear power uneconomic.” What troubles Taylor is “the fact that the price has been doubling in rather short intervals. At some point, higher uranium prices do begin to impact plans to build more nuclear power plants. And to the extent global warming is caused by manmade carbon dioxide emissions, the deterrence of new nuclear power plant construction due to higher prices would seem to be a shame.”