Uranium Spot Price on the Uptrend


"Rising demand. . .and supply shortfall are finally having an impact on the spot price of yellowcake."

Rising demand for uranium and the reality of a supply shortfall are finally having an impact on the spot price of yellowcake. The price has been on an uptrend this past month, reaching $51 per pound this past week.

As nations look for ways to keep up with spiking energy needs while lessening their carbon footprint, uranium demand will continue to rise in the long-term.

According to recent estimates by the World Nuclear Association, the number of nuclear reactors is expected to climb 30% by 2020 on demand from developing nations like China and India. The European Nuclear Society says that 44 new plants are currently under construction in 14 countries and the International Atomic Energy Agency estimates that world nuclear capacity could double by 2030.

As utility companies such as those out of China and Japan continue to firm up supply lines through acquisitions and partnerships, the spot price of uranium has come out of its $40 per pound bottom seen in April, and is now down only $2 from its December 2008 levels. However, the long-term price hasn't left its April low of $65 per pound.

Ron Hochstein, president of Denison Mines, anticipates the spot price will be more in line with the long-term price in 2009. "We expect to see the spot price trading much closer to the long-term price later this year, and believe the long-term price will remain near its current level in the short term, rising back to the $70/lb to $80/lb range in the mid-term," said Hochstein.

Simon Tonkin, an analyst with Thomas Weisel Partners, has predicted uranium prices will rise to around $60 per pound in the next months and reach $75 per pound in 2010. As far as supply is concerned, Tonkin says his firm believes the market will be in a "deficit until at least 2013" because producers aren't expected to open new mines until prices reach the $70 to $80 level.

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