February 22, 2007
Uranium spot price climbs to record US$85
Publisher: U3O8 Biz
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Uranium spot price climbs to record US$85
Late Wednesday the Ux Consulting Company spot price indicators have increased U3O8 prices US$10 to US$85 per pound after Tuesday's auction of 100,000 pounds of uranium.
This US$85 spot price marks a new record for uranium confirming research analysts' predictions that mine production continues to fall short of demand, and that inventories being sold into the market reflect the supply-demand deficit.
According to Adam Schatzker of RBC Markets, investors can expect to see the price of uranium continue to rise throughout 2007 and predicts the average price will be US$100 per pound this year.
As of December 2006, there were 435 reactors currently in operation producing 368,246 Mwe of power. There are 28 reactors under construction, 64 planned and more than 158 have now been proposed globally with more added to the every month.
The 435 operating reactors require approximately 180 MMlbs of U3O8 equivalent. 110 MMlbs of U3O8 is supplied by primary production with the balance being made up from secondary sources including mixed oxide (MOX) fuel, national and utility held inventories (both strategic and commercial), Russian LEU exports, recycling programs, Tails assay adjustments, DOE sales and HEU.
"With aggressive growth, buyers are eager to stockpile uranium supplies at fixed prices, while sellers view the uncertainty about remediation efforts by Cameco Corp (TSX: CCO) at its Cigar Lake uranium project as an opportunity to hold out for higher prices," says John Gomez, President, U3O8 Media Inc. "The increase in the spot price is a reflection of the uranium shortfall and provides investors with added confidence that the uranium sector represents among the best global investment opportunities."
The increase in spot price will likely be reflected in uranium stocks on Wednesday after a lackluster start to the week.
In other market news the Toronto stock exchange shook off early losses and closed with a slight gain at another all-time high Wednesday as a turnaround in oil prices supported energy stocks.
But inflation worries cast a shadow over the TSX and sent New York markets mainly lower after a worse than expected reading on the U.S. consumer price index raised fears about higher interest rates.
The U.S. Labour Department said prices at the consumer level rose 0.2 per cent in January. That was down from a 0.4 per cent rise in December, but it was higher than the 0.1 per cent increase that had been expected.
Core prices, excluding volatile energy and food components, rose 0.3 per cent ---a 10th of a point higher than expected.
On top of that, the release of minutes from the last Federal Reserve meeting made it clear that inflation remains a predominant concern.
The Toronto market's S&P/TSX composite index was up 10.63 points to 13,330.28, its fifth record high in the past six session, amid a major merger in the agriculture sector.
Canadian investors also took in solid retail sales data. Statistics Canada said sales in December jumped 2.3 per cent to $33.5-billion, the fastest monthly growth since December 1997.
For 2006 as a whole, retail sales came in at $391.4-billion, up 6.4 per cent from 2005, the biggest gain in nine years.
The strong retail sales report and the jump in oil prices past the psychologically important $60 (U.S.) a barrel level pushed the Canadian dollar up 0.79 of a cent to 86.19 cents (U.S.). The TSX Venture exchange rose 12.48 points to 3,136.63.
On Wall Street, the Dow Jones industrials closed 48.23 points lower to 12,738.41.
The Nasdaq composite index edged up 5.38 to 2,518.42 and the S&P 500 index dipped 2.05 to 1,457.63.
The TSX energy sector was down a slight 0.15 per cent even as oil prices in New York rose $1.22 to $60.07 a barrel after a spate of refinery shutdowns.
Inflation fears also sent bullion prices sharply higher. The April gold contract on the Nymex jumped $23 (U.S.) to a seven-month high of $684 an ounce, sending the TSX gold sector 2.6 per cent higher.
The industrial sector also finished positive. Shares in Canadian National Railway Co. were up 51 cents (Canadian) at $54.45 after Labour Minister Jean-Pierre Blackburn said Tuesday night that he would soon table a law ordering striking employees back to their jobs.
The tech sector was down 1.2 per cent. Open Text Inc. moved down $1.12 to $26.67 and Nortel Networks Corp. declined 38 cents to $36.23.
The metals and mining sector declined 0.3 per cent.
TSX advances beat declines 835 to 789 with 247 issues unchanged as 488.2 million shares traded worth $6.7 billion.
In junior exploration news Uranium North Resources has seen its stock double from 0.88 cents to a high of $1.67 in the past two days on news that widespread mineralization was discovered on its Amer property in the Thelon Basin, Nunavut.
Aurora Energy Resource saw its stock price pullback after reports that community protests and appeals by Mine Watch Canada have resulted in the Newfoundland and Labrador government reversing its decision to have third party environmental monitoring of the company's winter drill program. The Labrador uranium mine project has a history of community unrest and was brought to a halt during the 1970's.
World News
South Africa is thinking about enriching its own uranium to fuel new nuclear power plants -- including pebble-bed modular reactors -- to be built in coming decades, its Minerals and Energy minister said on Tuesday.
Speaking in Cape Town at the opening of the French-South African Energy Conference, she said her department is finalising an energy and technology strategy that will "outline a vision" for the country's nuclear future.
The strategy, once completed, is expected to pave the way for the development, design, construction, commissioning, demonstration and commercial operation of "innovative and conventional nuclear power plants ... based on international bidding by nuclear vendors".
Watch for our next market commentary when we explain of how the uranium spot price is set and what it actually means for investors.
You can view the Next Market Commentary item: Mon Feb 19, 2007, Uranium price increase likely amid statistical onslaught
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