Canaccord Genuity comments on the uranium sectorAccording to Canaccord Genuity:
May 21, 2014
Where were you nine years ago? The uranium spot price has now fallen to levels not seen for nine years. According to UxC, the newest pricing suggest that the oversupply in uranium is both extensive and long lasting. Adding, has it fallen too far, or does it still have much further to fall? UxC stated that a number of factors are contributing to current market perceptions and the decline in pricing, including further delays in Japanese reactor restarts, ample supplies still coming from new production, inventory supplies that are available to the market and the lack of utility needs for spot material, and the decline of activity by the banks. UxC highlights that the main ways that demand can increase quickly is if Japanese reactors are brought back online and China decides to build more reactors and build further inventories well in advance of these reactors operating. There could also be inventory building in response to actual or potential sanctions against Russia. However, beyond these examples, UxC notes that it is difficult to see how demand can increase very quickly.