Uranium Prices Steady After Ending 2016 as Worst Performing Commodity

Spot uranium prices were unchanged in the first week of 2017, as investors look to the future for 2016’s worst performing commodity. Unfortunately, 2016 was not an anomaly. Uranium prices have slumped since the 2011 Fukushima nuclear disaster. But, even before the nuclear disaster, uranium prices started their downside. The commodity has fallen in seven of the last nine years.

Uranium prices slumped 41% in 2016, touching a 12-year low below $18 per lb. A surprise considering there was some optimism over the market when the year kicked off. The disappointing performance was attributed to a slower-than-expected restart of nuclear plants idled during the disaster.

While many countries have idled, and even shuttered nuclear plants in the aftermath of the Fukushima nuclear disaster, ongoing building of nuclear plants in other regions, combined with even more nuclear plants in the planning stage are optimistic for nuclear’s long term outlook. Around the world, there are 61 new reactors being built and another 149 are in the planning stage. However, right now, things are very bleak for miners who are in most cases producing the commodity at a loss.

Spot uranium prices started to ascend toward the end of last year, but this won’t necessarily spill over into the more important futures market. Of note, futures prices are currently higher than spot prices.

In company news, Paladin Energy is undergoing a complex refinancing to restructure its borrowings as the company looks for a way to survive the current, low price environment. Losses are resulting in uranium miners cutting production or closing operations, and this may help balance the market and send prices higher.

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Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.