URANIUM 1.02% $24.70 uranium futures

rally in spot price

  1. 32,860 Posts.
    ENERGY
    MARKET BALANCE CHANGED
    Uranium poised for strong rally - RBCCM
    Spot uranium market for 2008 suddenly sees market balance shift to a deficit, and could be “set for a strong rally”.

    Author: Barry Sergeant
    Posted: Wednesday , 05 Mar 2008

    JOHANNESBURG -

    Royal Bank of Canada Capital Markets is telling clients that "we think the sentiment of the uranium market has changed substantially in a very short period . . . our 2008 market balance estimate has shifted to a deficit (from a balanced market) and we think the spot market is set for a strong rally".



    RBC CM puts its observations down to three recent events: Uranium One (UUU CN, C$4.90 a share) reducing production guidance from its Dominion mine in South Africa by 1.5m pounds a year; AngloGold Ashanti warning it may have to declare force majeure, and, Uranium Participation Corp. (U CN, C$11.65) buying 900,000 pounds on the spot market.



    RBC CM's forecast for spot uranium prices over the next two years is $110/lb in 2008 and $100/lb in 2009. Uranium prices moved up from around $7/pound eight years ago to a peak of $136/pound in late June, 2007 and then fell sharply. This week, quotes were around $74/lb (down $1/lb on the previous week), according to Ux Consulting, a specialist uranium consultancy; peer group TradeTech this week quoted $73/lb (down $2/pound). The long term expectation for both Ux and TradeTech remains at $95/lb.



    RBC CM notes a "very busy" spot uranium market over the past week, with 40% of the month's total transacted. Ux believes the market may have found its "sweet spot" between $70 and $75 per pound. Recently, suppliers have been raising prices, resulting in the increased spot price indicator. Ux believes the increased spot market activity can be read two ways: (1) the aggressive sellers are sold out and the market is firming; or (2) there was a large amount of material sold between $70 and $75 and it will take lower prices to move additional material.



    Ux also notes that utilities were not the primary buyers in February (accounting for about 20%); it was rather traders, hedge funds and investment funds (e.g. Uranium Participation Corp.) that accounted for the bulk of activity.



    Selected uranium stocks



    Stock
    From
    Value

    Producers
    price
    high*
    US$m

    Cameco
    C$38.49
    -35.7%
    13243

    Uranium One
    C$4.90
    -73.4%
    2288

    Paladin
    A$6.10
    -43.5%
    3462

    ERA
    A$23.42
    -18.1%
    4136

    Denison
    C$8.86
    -46.5%
    1680






    Developers




    First Uranium
    C$7.83
    -41.4%
    1025

    Aurora
    C$9.08
    -54.8%
    664

    Mega
    C$3.22
    -64.1%
    579

    Xemplar
    C$3.10
    -63.5%
    350

    Bannerman
    A$2.19
    -47.1%
    273

    Deep Yellow
    A$0.31
    -57.0%
    313

    Laramide
    C$4.60
    -72.5%
    270

    Extract
    A$1.13
    -23.6%
    193

    UR-Energy
    C$2.34
    -55.0%
    216

    Forsys
    C$3.22
    -68.4%
    247

    Tournigan
    C$1.20
    -73.3%
    147

    Strathmore
    C$1.84
    -66.5%
    133

    Uranium Energy
    $3.55
    -60.8%
    134

    Berkeley
    £0.46
    -50.3%
    105

    Kalahari Minerals
    £0.38
    -18.8%
    82

    Khan
    C$1.64
    -70.9%
    89

    West Prospector
    C$0.77
    -87.6%
    42

    Average

    -54.2%







    Diversified




    BHP Billiton
    £16.18
    -14.8%
    191668

    Rio Tinto
    £56.75
    -4.3%
    162483

    * 12-month











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