TD - Uranium Spot Sellers Getting More Aggressive Key Points
The Ux Consulting (UxC) spot uranium price declined 6.0% last week to
$20.00/lb (-$1.25). The September month-end term price is maintained at $38.00/
lb. The three year and five-year price indicators declined to $23.50/lb and $28.00/
lb, down US$1.50/lb and US$2.00/lb, respectively. The spot uranium price is now
at a more than 12-year low.<BR/><BR/>
Sellers more aggressive as year-end approaches – As was the case last
week, sellers in the spot market are getting more aggressive as they try move
material into very weak demand. Pessimism reigns and there is a high degree of
uncertainty surrounding future market activity and price direction. There is some
expectation that financial players may start to show more interest in the spot
uranium market as the price continues to weaken. But that being said, participants
at an industry conference last week continued to take a sober outlook in the
market - utility inventories are at high levels globally while at the same time energy
demand is slowing. Competition from natural gas and slow-moving policy changes
are putting nuclear plants at greater risk.<BR/><BR/>
Term demand delayed – Term demand remains desultory. UxC is noting that
several utilities that were expected to enter the market in 2016 have decided to
delay and to continue to reevaluate the market, perhaps until early 2017.<BR/><BR/>
Uranium price deck lowered - In our Q3/16 Preview published on October
21, 2016, we reduced our uranium price deck from 2016 through 2019 and
delayed our long-term price. We do not expect the uranium market to re-balance
before 2020, and with utilities well-supplied, we expect demand to remain highly
discretionary. We have adjusted our uranium price forecast to delay reaching
our US$55/lb LT price until 2023 (previously US$55/lb starting 2020).