Uranium Prices Retreat, But Optimism Holds

Spot uranium prices declined by one dollar in the week ended March 13 and are now sitting at $24.50. The commodity is holding onto a good chunk of its gains that were experienced after the commodity plunged to a low of just above $17 per lb in late 2016.

The clawback in uranium prices was seen as a response to supply-side changed, and prices accelerated their recovery rally in January after major uranium producer Kazakstan announced a significant supply cutback. Prices did steady, and then turn lower in February when suddenly, in just one week, deals dried up. There were concerns that this meant that a correction would ensue, but prices have since traded in either direction of a fairly tight range. Now, it seems the rally has stalled for now as demand remains weak but prices are not likely to be headed for another hard landing.

As spot prices have rebounded from their low, market participants are once again turning optimistic. There has always been some optimism over uranium’s future even as prices crashed. This optimism stemmed comes from the amount of nuclear plants currently under construction. Once online, these plants will boost long-term uranium demand right now we are in a bit of a lull as demand remains impacted due to the Fukushima nuclear disaster.

In the near term, one major market development being watched is Cameco’s push to divest some assets. The company reported in early March that it would consider selling some of its US assets. There is also the potential for the company to further cut production and that could boost prices. These adjustments are a part of the company’s reaction to TEPCO’s sudden uranium contract cancellation, which Cameco plans on fighting.

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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.