Stricken Uranium Stocks

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The findings of the latest (northern hemisphere) Winter Market Survey conducted by Ux Consulting, a specialist uranium consultancy, offers little solace for battered listed uranium stocks. Survey participants don't believe that the uranium spot price will go below $70/lb this year; the number is seen as a key support level, and equilibrium between buyers and suppliers is seen as sitting in the $70-$75 range.

The findings of the latest (northern hemisphere) Winter Market Survey conducted by Ux Consulting, a specialist uranium consultancy, offers little solace for battered listed uranium stocks. Survey participants don't believe that the uranium spot price will go below $70/lb this year; the number is seen as a key support level, and equilibrium between buyers and suppliers is seen as sitting in the $70-$75 range.

The bad news is that survey participants do not see much near-term upside for the spot uranium price from this range. Uranium prices moved up from around $7/pound eight years ago to a peak of $136/pound in late June 2007, and then went into a funk. This week, Ux quoted spot uranium prices unchanged from the previous week at around $70/lb.

A selection of some 40 listed uranium stocks indicates an average loss from peak prices of about 62%; put another way, these stocks are trading, measured arithmetically, at just over a third of maximum value reached over the past 12 months. Recent stock trading patterns, however, indicate strong investor interest in listed uranium stocks, with an apparent desperate determination to pick the sector up...

Further on the Ux survey, there was a roughly even split between participants who believe spot uranium prices have bottomed out at current levels, and those who believe the spot price can fall further. Buyers, naturally enough, see further declines; sellers believe the bottom is here. A majority of participants in the survey see $80-$90 for spot uranium prices by the end of 2008, within a larger trading range of $60-$100 for the rest of this year. Looking forward to 2013, most participants forecast a spot price in the $50-$100 range. There was no apparent consensus between participants on whether spot or term (contract) prices better indicate the uranium market.

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