Australian Uranium Production to Rise


"World uranium requirements are forecast to increase faster than world supply in 2009."

Despite heavy losses in the spot price of uranium over the past year, analysts are predicting a gradual recovery over the next two years.

In 2007, global uranium prices averaged $US99.30 per pound, dropping 38% to average $US61.80 per pound in 2008.

The downward pressure on the price last year was a result of hedge funds and investors liquidating uranium stocks to make up for losses in the equities markets. These actions drove the price down from about $64 per pound in August 2008 to $44 in October 2008.

But the same fundamentals of strong demand and supply concerns that helped force the price up in 2007 are still in place, especially with governments worldwide turning to nuclear power for its energy needs. Many analysts and agencies are confident that the price of uranium will recover once the shadow of the global financial crisis abates from the market. Bart Jaworski, an analyst at the North American investment firm, Raymond James, expects the uranium spot price to reach $80 per pound by 2010.

The Australian Bureau of Agriculture and Resource Economics (ABARE) has forecast a brighter future for the uranium market, as well. "World uranium requirements are forecast to increase faster than world supply in 2009," said ABARE in a recent report. Increasing demand is expected to weigh heavy on existing supply, which will experience another deficit for the sixth year in a row for 2009.

"Supported by this deficit, spot prices are forecast to recover gradually in 2009 to end the year at around US$62 a pound," estimates the agency. Further growth in uranium consumption and decline in supply will no doubt support further price increases into 2010.

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