Uranium Prices Weak, But Cameco’s Latest Results Show Buying Interest Improving

Uranium prices continue to languish, with spot prices falling to $19.75 per lb. this week, down from $20 per lb. just a week earlier. Uranium prices have collapsed since the Fukushima Nuclear Disaster as countries shelved nuclear development plans, but earnings from Cameco released this week suggest that demand for the commodity could finally be turning the corner.

Cameco Corp. on Wednesday reported a better-than-expected quarterly profit, with a jump in uranium sales volumes, contributing to the upside. This is a particularly bullish signal for the uranium sector with low interest in buying uranium combined with high levels of stockpiled uranium, pushing prices down significantly since the nuclear disaster.

Cameco’s uranium sales rose 35% to 9.3 million pounds in the third quarter. The company reported a net profit of CDN$142-million, or 36 cents per share, a significant improvement compared to the loss of CDN$4-million, or 1 cent per share in the third quarter of 2015. Adjusted earnings were CDN $0.30 per share, surpassing the analyst expectation of CDN$0.28 per share. Revenue was CDN$670-million, topping analysts’ expectation of CDN$654.9-million.

While the big boost in uranium sales was positive for the company, Cameco warned that the uranium market would remain depressed until Japan restarted its nuclear reactors and excess uranium supply was depleted.

While the uranium market stagnated after Fukushima, over the long term demand is expected to improve due to the amount of nuclear power plants currently under construction. This October, the first nuclear generator commissioned in the US in 20 years began commercial operation. The Tennessee Valley Authority brought the Watts Bar 2 Reactor on line on October 19, the first of five nuclear reactors under construction in the United States, all of which are expected to come online by 2020. Worldwide, according to the World Nuclear Association, about 60 nuclear power reactors are under construction with estimates of over 160 in the firm planning stages.

Donald is a strategist for economiccalendar.com. He specializes in a fundamental approach while informing traders of relevant economic data. Actively trading since university, Donald trades indices and commodities. He earned his Bachelor's in Finance from Baruch College's Zicklin School of Business in New York City.