Uranium Outlook Is Solid Long-Term - RBC

Even after a very rough year in the uranium market, RBC Capital Markets analysts Adam Schatzker and Fraser Phillips continue to like the long-term prospects of the radioactive metal.

In a note to clients, they wrote that the market should remain in balance from 2009 through 2017. But from 2018 onward, their projections indicate a potential for "severe and growing" deficits as more nuclear reactors are built and supply problems persist.

In the long term, they think that new supplies needed to fill the gap after 2017 will require a uranium price above $80 a pound to give producers and explorers the motivation to get new projects onstream. Below $75, the capital markets will not be too willing to fund projects.

"In our opinion, the prevailing uranium price [about $53 a pound] is too low to stimulate sufficient demand to cover future reactor requirements," they wrote.

All the same, the analysts do think that 2007 was the "peak" year for uranium prices. That was when a run on the metal by hedge funds sent the spot price up to ridiculous levels above $130 a pound.

They are forecasting an average spot price of $60 a pound in 2009, growing to $75 in 2011 and $80 in 2013.

Amounts shown in US$

Comments

[drone:]

Denison Mines jumps 36% in a day on no news and Cameco also goes up sharply . So now we have these leaches like this guy from RBC jumping on the bandwagon. What's it called, trend following? Schatzker is a trend following analyst without an original thought of his own.

Jan 05 06:06 PM

[John Polomny:]

Uranium is so washed out it has no where to go but up. Even with higher uranium prices very little new supply has been brought on line. Excellent entry point on any short term pullback.

Jan 05 07:33 PM