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Uranium Price - Where is it heading?

kennas

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There's been some discussion in the stock threads about the uranium price and forecast. Thought discussuion might be better in it's own thread to try and get some decent responses.

In my opinion, the immediate picture looks very bullish due to the supply demand equation and it's hard to see what's going to force it back down until the new supply starts comming on and catches demand in the 2010s, probably around 2013 ish. Factors significantly effecting this outcome will the the extent of the OD expansion (output to tripple apparantly), Cigar Lake developments, extension of Jabiluka and opening of Ranger, and how successfully current developers can get their mines in to operation in Namibia, Zambia, Peru, SA/NT, Khazakstan, and the US, amongst other places.

The other factor perhaps not really considered so far is that once the price of uranium gets too expensive then other options will be looked at for energy production. This is certainly part of the supply/demand equation and can not be overlooked.

So, short term to medium term we're going to see the price continue to rise, to what level may be determined by market factors. It can only go high till it's still desirable. I do not know what this price is. $300 lb?? It's a guess really.

Long term - 10+ years - possible around the time when all this new cake is comming on line - from 2013 +/- perhaps, I have seen prices range from $30 - $60. The only 'expert' reference I have found is from Resource Capital Research and it is probably out of date. This analysis was from mid 06.

http://new.marketwire.com/2.0/rel.jsp?id=601544

And their view is:

Market forecasts for the long term price of uranium are generally around US$30/lb. Given potential rising demand for nuclear power plants (180 new nuclear reactors are currently proposed or planned worldwide) and the potential for delays to forecast new uranium production, we consider there is upside risk to this long term price forecast.
Does anyone have any other references to more recent mid and long term forecasts?
 

kennas

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This 'expert' gives US$85, as the 'long term' price. Need a definition of long term I feel.

Uranium supply crunch will push prices up
By Dave Hannon
Purchasing
May 30, 2007

The CEO of the world’s largest uranium mining company says buyers can expect a uranium supply crunch in the near-term due to a lack of investment in uranium mining.

The lack of supply will push uranium prices up in the short term, but long-term prices will come back down as more supply comes online.

"In the near term we've got a little bit of a supply crunch that's going on mostly because for two decades there was almost no investment being made in exploration," Jerry Grandey, CEO of Cameco told the Reuters Global Mining and Steel Summit. "In the long term there's no question that these high prices are going to stimulate more production and as soon as there's a little bit of excess in the marketplace then I think you'll begin to see prices relax."

Grandey said while spot uranium prices were rising dramatically, the long-term price for uranium was about $85/lb, and “there doesn't seem to be much upward pressure on the long-term price, at least in the last few months.”

Other market participants, such as Neal Froneman, CEO of Toronto-based SXR Uranium say uranium prices may more than double to $250/lb next year as demand for the nuclear fuel outpaces production.

The uranium supply crunch and price increase is also pushing mining firms such as Rio Tinto Group to expand its mining efforts. In a recent presentation reported by Bloomberg, Rio Tinto Energy Group CEO Preston Chiaro said, “There remains plenty of upside to uranium fuel prices” and that Rio will benefit from higher prices when the company's long-term legacy contracts, signed with customers at lower prices, begin to expire between now and 2012.

http://www.purchasing.com/article/CA6447783.html
 
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looking good for the future IMO kennas

projects that will be feasible for lower spot price of uranium will be ones to benefit, as well as current producers and near term producers.

PDN looking better and better.
 

kennas

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The more I search on 'analysts' forecasts for uranium price the more skeptical I get about their assessments. They are all getting it wrong to the downside this year, so you'd have to think their longer term views might be a bit to the downside as well.

This article was from Jan 07. Not long ago.

Uranium 2007 Price Forecast
By: James Finch

It is no wonder the research analysts are bullish about the uranium price. Vicky Binns and Daniel Hynes of Merrill Lynch forecast an average price of $75/pound in 2007 and $80/pound in 2008. The analysts stated, “We don’t see a major trigger on the horizon that will force spot prices down.” Adam Schatzker of RBC Capital Markets remarked, “There is not a lot of mine production. The inventories being sold into the market are disappearing and we’re actually in a supply-demand deficit.” He predicted the uranium price would average $100/pound in 2007.

Canada’s Scotiabank Vice President of Economics Patricia Mohr, who told us at the Platts Energy Conference in September of a secular change in the global energy markets, forecast $80/pound average through 2007 and a year ending price close to $90/pound. She commented, “There has been little improvement in mine production.”

In September, Mohr told us the uranium price would end above $60/pound, but in light of the Cigar Lake episode, she has joined other analysts in ratcheting up her estimates. The same is true of Raymond James analyst Bart Jaworksi, whose latest estimates show an average uranium price of $90/pound for 2007 and an average of $100/pound for 2008 and 2009. But, Jaworski did not budge from his price forecast of an average uranium price of $60/pound for 2010.
http://www.uraniumseek.com/news/JamesFinch/1168443393.php

There's seems to be too many different views due to too much uncertainty to find an adequate estimate?
 
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Hey Kenna,

I reckon the analysts have about as much clue as you or I do regarding the Future pirce for Uranium,

I see it as being strong, now I don't know if this menas continued upward movements, BUT I CAN'T SEE IT RETRACING TOO MUCH,

In the Market ...
The spot uranium price continues to break all historical records, and the spot uranium price reported on May 31 of $133.00 per pound U3O8 has already been superseded by market developments. Bids were due Friday, June 1 to a seller offering 200 thousand pounds U3O8 and 100 tU as UF6 for delivery by June 15. Another seller is auctioning 125 thousand pounds U3O8 for delivery in June. Bids are due to the seller by June 12. Buyers that submitted losing bids earlier in the week to a US producer selling 100 thousand pounds U3O8 adjusted their bids upward in an effort to win the material offered in today’s auction. The introduction of additional supply during the last half of May from a variety of sources (in the form of both U3O8 and UF6) has eased the tight supply situation somewhat. This has served to buffer the market from the dramatic price increases witnessed in the past few months. As a result, TradeTech’s Spot Price Indictor is up a modest $5.00 to $138.00 per pound U3O8.


My call $150 US/lb avg over 2007
 
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The more I search on 'analysts' forecasts for uranium price the more skeptical I get about their assessments. They are all getting it wrong to the downside this year, so you'd have to think their longer term views might be a bit to the downside as well.
Agree Kennas - heres some numbers I posted 21 Jan - all looking woefully inadequate

brokers yearly average price for u3o8 from the eureka report...

2007 2008 2009
Deutsche Bank 100 105 90
Merrill Lynch 75 80
RBC Capital 100
Scotiabank 80
Raymond James 90 100 100
JP Morgan 90 80 80

Overall average $89.17 $91.25 $90.00
 

kennas

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Hey Kenna,

I reckon the analysts have about as much clue as you or I do regarding the Future pirce for Uranium,

I see it as being strong, now I don't know if this menas continued upward movements, BUT I CAN'T SEE IT RETRACING TOO MUCH,

My call $150 US/lb avg over 2007
I think 'analysts' are probably more conservative generally than we would be. There's probably more negative consequence to them if they get it wrong to the upside.

I certainly agree that it will be strong short to medium term and I'd think ave $150 this year is possible, but my interest has been long term when some of the juniors may be producing and the long term price may determine their viability. All these new players are probably looking at the mid 10s to produce. Grades and costs per lb start to become more important here.

I started this thread in the hope that some of the conjecture about how important long term prices are to the juniors could be discussed in order to have a more informed view of their potential to mine.
 
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Auctions Return Excitement To Uranium Market
FN Arena News - June 04 2007

By Rudi Filapek-Vandyck

Our sources in the industry were quick in notifying us TradeTech's weekly U3O8 (uranium concentrate or yellow cake) spot price had been set at US$138/oz on Friday, an increase of US$16 (13.11%) from the previous week's US$122/oz.

No doubt the market will be closely watching what figure Ux Consulting, the other market watcher that sets weekly spot prices, comes up with this week as TradeTech's figure appears only to include indicative suggestions regarding Friday's auction.

On Thursday, Mestena's monthly auction of 100,000 pounds of yellowcake had pushed the new benchmark up to US$133/oz. It is widely believed Friday's auction will have generated a figure closer to if not above US$140/oz.

Possibly of equal importance is that TradeTech decided to increase its long term price indicator to US$95/oz on Friday as professional investors had been zooming in on the fact that, while the weekly spot price continued rising, the longer term price indicators at TradeTech and Ux had failed to follow suit. This may now take away some of the cautiousness that had been ruling the sector over the past few weeks.

As the next auction is scheduled for June 12 the market is likely to continue enjoying a strong pricing environment this month. Were spot uranium to reach US$150/oz over the next few weeks this would beat the most optimistic forecasts at the beginning of calendar 2007 by about six months. This may serve as a formal indicator about how the tightness in the uranium market has surprised even the staunchest bulls over the past few months.

Stockinterview.com reports the June 12 auction involves 125,000 pounds of U3O8.

What should boost enthusiasm among investors in Australia is that one of the not so bullish market watchers, Macquarie, has significantly increased its price forecasts for the next few years. Judging by the latest developments, however, another upgrade of the broker's price forecasts may be necessary before the end of this year.

Macquarie forecasts U3O8 spot prices will peak at US$150/lb by year end, to average US$125/lb for the year. The average price for U3O8 is currently already above US$120/lb.

On Macquarie's forecasts, spot uranium should average US$135/lb in 2008. The broker continues to see a "moderating on strong mine supply growth" after that with spot uranium expected to average US$100/lb in 2009.

"While these forecasts represent a central case, we would not be surprised to see prices move up to around US$200/lb over the next two years", the analysts added.





interesting to note forecasts are starting to increase
 

MBI

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Hey Kenna,

I reckon the analysts have about as much clue as you or I do regarding the Future pirce for Uranium,

I see it as being strong, now I don't know if this menas continued upward movements, BUT I CAN'T SEE IT RETRACING TOO MUCH,
Agree with your view on the analysts and it is a good thing really for investors (long position) that their forecast erred on the conservative side.

I think we found ourselves in relatively uncharted water over a peculiar short-term demand/supply situation contributed by a host of factors:
1. Sudden surge in uranium demand over the past 2-3 yrs as alternative energy in response to accelerating oil prices and global warming awareness
2. Supply inelasticity due to depletion of ex-nuclear stockpile. Current productive mines locked in to long-term pricing supply contracts to finance their projects then, and will see the impact of higher prices coming in around 2009 on contract renewals. It takes 7-10 yrs to bring a prospective uranium mine into production and even so not all are very smooth namely the flooding of Cameco and ERA mines while Paladin is just beginning to contribute to new supply.
3. Prices of limited supply exacerbated by the absence of a transparent trading platform. The spot prices which we use now are based on a closed auction deal between buyers-sellers, although there is a EFT future contract trading platform established in recent months.
4. Hedge and private equity funds have entered into this limited market in recent months and some has reckoned that they are already holding collectively 15% of current available stockpile.

How long will this honeymoon pricing last? I wish it will go on and on forever so that our u-counters will go up continuously, but one really know for sure although 2010 seems to be the general thinking. But one thing most analysts agree is that with the hedge fund mgrs involvement, prices will become pretty volatile as other smaller investors feel the impact of their predatory prowess in the market. Comparison has been made with the volatile gold bullion prices over the past 1.5 yrs allegedly by these smart players, and warned that it will be worse for uranium due to its limited available supply till 2010. So one should get ready for a bumpy if not a roller-coaster ride soon once these fellas figure a way to maneuver in the market. Right now they seem to have their plate full in mega corporate buyouts.

Cheers
 

MBI

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Like to share with everyone here about this article which I find interesting and very pertinent to this thread on where u prices is heading. A pretty independent reporting on presentations at the world conference by various big-guns of uranium producers and brokers, and power utility suppliers.


Utilities, Miners Bitterly Divided on Uranium Price Rise
Report from World Nuclear Fuel Market Conference
June 8, 2007 - By James Finch and Julie Ickes

http://www.stockinterview.com/News/06082007/nuclear-fuel-conference-uranium-price.html


...Cheers
 

kennas

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Uranium Prices Steam to a Froth

By John Hurst, Resourcex.com
Jun, 7th

From percolation to effervescence, the heady times of uranium prices can be expected to continue, before steadily declining in a couple of years.

The U.S. spot price currently bubbles at $138 a pound for U308.

And uranium at $200 per pound in two years? Two uranium analysts commented on June 5, “In the near term, with the market expected to remain in significant deficit in 2007-08, risk on the supply side and growing speculative interest, it is hard to see what could prevent spot prices going higher. We would not be surprised to see prices move up to around $200 a pound over the next two years.'' These were Macquarie analysts Max Layton and John Moorhead, based in London and Sydney, respectively. Another seer, Neal Froneman, chief executive officer of SXR Uranium One, said the spot price could reach $250 a pound in 2008.

In the past four years, the price of uranium has erupted from a depressed low of $7 a pound to its current $138. Usage has remained stable, but resources have declined. Cameco, the world’s largest producer, had to curtail production for two years because of a flood in its best mine.

Quoting RBC Capital Markets and other banking outlets, a June 5 Macquarie estimate states that the uranium market supply deficit, which was 10,572 metric tons last year, should halve this year and narrow further next year to 3,945 tons, as supplies increase from new mines in Kazakhstan, Africa and North America. Beyond 2008, the market will probably move into surplus as supply responds to higher prices, it said.

But according a report by Bloomberg, total supply is forecast to increase by about 46 percent to 90,500 tons by 2013 from 62,192 tons in 2006. Mine supply is set to surge by 85 percent to 72,821 tons by 2013, while secondary supplies are set to fall 23 percent over the period.

Macquarie forecasts the average uranium spot price will fall to $100 a pound in 2009, $80 in 2010 and $65 in 2011, then to a longer-term average forecast of $40.

How is the price for uranium determined, especially in an era of amply demonstrated scarcity? There are two industry monitors - Ux Consulting and TradeTech. Ux editors have been reluctant in the past to disclose, in a layman’s terms, how the prices are determined.

There is no formal exchange for uranium as there is for other commodities such as gold or oil. Uranium price indicators, Ux says, are developed by a small number of private business organizations, like itself, that independently monitor uranium market activities, including offers, bids, and transactions. Such price indicators are owned by and proprietary to the business that has developed them.

The latest dispatches from major media outlets reported on June 5 that a British Columbia uranium junior, Energy Metals Corp., envisions a market capitalization of $8.2 billion, once it is sold for $1.7 billion to Toronto’s SXR Uranium One. If done, the deal would place the new entity in second place with world leader, Cameco Corp., of Saskatoon.

http://resourcexinvestor.com/news.php?id=1528
 
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Uranium Prices Steam to a Froth

By John Hurst, Resourcex.com
Jun, 7th

From percolation to effervescence, the heady times of uranium prices can be expected to continue, before steadily declining in a couple of years.

The U.S. spot price currently bubbles at $138 a pound for U308.

And uranium at $200 per pound in two years? Two uranium analysts commented on June 5, “In the near term, with the market expected to remain in significant deficit in 2007-08, risk on the supply side and growing speculative interest, it is hard to see what could prevent spot prices going higher. We would not be surprised to see prices move up to around $200 a pound over the next two years.'' These were Macquarie analysts Max Layton and John Moorhead, based in London and Sydney, respectively. Another seer, Neal Froneman, chief executive officer of SXR Uranium One, said the spot price could reach $250 a pound in 2008.

In the past four years, the price of uranium has erupted from a depressed low of $7 a pound to its current $138. Usage has remained stable, but resources have declined. Cameco, the world’s largest producer, had to curtail production for two years because of a flood in its best mine.

Quoting RBC Capital Markets and other banking outlets, a June 5 Macquarie estimate states that the uranium market supply deficit, which was 10,572 metric tons last year, should halve this year and narrow further next year to 3,945 tons, as supplies increase from new mines in Kazakhstan, Africa and North America. Beyond 2008, the market will probably move into surplus as supply responds to higher prices, it said.

But according a report by Bloomberg, total supply is forecast to increase by about 46 percent to 90,500 tons by 2013 from 62,192 tons in 2006. Mine supply is set to surge by 85 percent to 72,821 tons by 2013, while secondary supplies are set to fall 23 percent over the period.

Macquarie forecasts the average uranium spot price will fall to $100 a pound in 2009, $80 in 2010 and $65 in 2011, then to a longer-term average forecast of $40.

How is the price for uranium determined, especially in an era of amply demonstrated scarcity? There are two industry monitors - Ux Consulting and TradeTech. Ux editors have been reluctant in the past to disclose, in a layman’s terms, how the prices are determined.

There is no formal exchange for uranium as there is for other commodities such as gold or oil. Uranium price indicators, Ux says, are developed by a small number of private business organizations, like itself, that independently monitor uranium market activities, including offers, bids, and transactions. Such price indicators are owned by and proprietary to the business that has developed them.

The latest dispatches from major media outlets reported on June 5 that a British Columbia uranium junior, Energy Metals Corp., envisions a market capitalization of $8.2 billion, once it is sold for $1.7 billion to Toronto’s SXR Uranium One. If done, the deal would place the new entity in second place with world leader, Cameco Corp., of Saskatoon.

http://resourcexinvestor.com/news.php?id=1528
Tend to agree very much with this article.
Blow off at 200-250 next year, then after 2010 ease to 60-80.

Probably 60-80 long term price for me, not $40.
 
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thoughts .....
1. japan is re-starting at least 1 this month
2. the pakistan or bangladesh or wherever it is plant is opening soon
3. the big yank mob closed their mine but they have many years worth of future supply contracts to satisfy, presume they will go spot if they do not announce a lock-in at some stage
4. the us senate is doing that talkfest about putting a minimum % figure on us sourced U for us use.
 
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Thanks for that link to the uranium article.

Unfortunately uranium prices depend on politics as much as anything else.

It is by far the best form of energy as long as the reactors are well sited, maintained and not run by idiot states.

If Germany or what's left of it reversed it's ill advised ban on uranium for example the price would move. It would take something like that to change the lows.

gg
 
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Uranium producers have lately cut production and huge players such as Cameco is buying large volumes instead through the spot market to fulfil its contracts.

Utilities have been buying spot supplies for several years now to take advantage of low prices. But in the last six months, the spot market has been turned on the assumption that continuing supplies have reduced due to the supply cuts.

In perfect economic theory, the spot market should dry up and utilities will have to face the music and sign new long-term supply contracts… in the shadow of a looming deficit.

But its hard to see if real demand is there yet, given the spot market has been overflowing with supply for years, especially since Fukushima.
 
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It was silly to put nuclear reactors in high earthquake prone areas.

I doubt if the U price will see it's past highs anytime soon despite spot and supply movements.

These are too easily corrected by willing producers with debt.

gg
 
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For many Asian countries, they simply have no options given they do not have a vast mineral resources like Australia, otherwise, Australia would not have had the mining boom previously.

Countries such as Japan, South Korea (majority of the coal resources is in North Korea) and Taiwan have minimal coal reserves or gas, hence the reliance on Nuclear which although upfront costs/capex are high, is cheaper to run and nil carbon emissions as well.
 
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From AFR:

"ASX-listed Boss Resources has sold its stake in its African gold project to its Canadian joint venture partner.

It is understood Boss is set to announce it has agreed a deal to sell its 49 per cent interest in the Burkina Faso-based Golden Hill project to TSX-listed Taranga Gold Corporation.

For Boss, funds raised were expected to be plied towards the company's primary focus; the Honeymoon uranium project in South Australia.

Boss Resources is seeking to get Honeymoon back into production in coming years, having recently taken full control of the project. Honeymoon was last producing uranium in 2011."

This is interesting news, maybe the producers are sensing the market has changed from supply side issue to a potential increase in real demand going forward.
 
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