Good news for Uranium in 2009I've been watching on the sidelines but i though this would be of interest. (this may be old news for you guys though)
OTTAWA, Dec 3 (Reuters) - A significant, sustained rebound in commodity prices is unlikely before the second half of 2010 due to excess inventory, a protracted global recession and weakening demand in China, RBC Capital Markets said in a note on Wednesday.
"It all adds up to a tough year for metals and bulk commodities in 2009," said the research note, written by several mining analysts.
"The industry appears to have responded with production cuts more quickly than in previous cycles. However, the announced reductions will take some time to take effect."
RBC has modestly lowered commodity price forecasts for 2009 and 2010 to reflect lower global growth assumptions.
"Commodity prices may rebound from their lows over the next 12 to 18 months as the economic outlook stabilizes and begins to improve," analysts wrote.
"However, significant sustained increases in commodity prices will likely not occur until excess inventory has been eliminated and idled capacity is restarted."
Investors are recommended to enter 2009 with an underweight position in non-precious-metal miners, which are seen as underperformers next year, and focus on large, liquid, diversified operators with strong balance sheets and cash flow.
The analysts pick uranium as their preferred commodity and believe coal and iron will outperform other metals over the next 12 months. Over the longer term, zinc and molybdenum could outperform based on mine closures and project delays.
They recommend shares of uranium producers Cameco Corp CCO.TO, First Uranium FIU.TO, Uranium One UUU.TO and UR Energy URG.A, along with bulk commodities operators Labrador Iron Ore Royalty Income Fund LIF_u.TO and Teck Cominco TCKb.TO.
Analysts recommend metals producers Antofagasta Plc ANTO.L, Inmet Mining IMN.TO, First Quantum FM.TO, HudBay Minerals HBM.TO, Anvil Mining AVM.TO and Katanga Mining KAT.TO .
A bear market rally is possible in the near term, supported by a major selloff of stocks, slumping valuations and seasonal buying, the note said.
Balance sheets will remain under pressure from deteriorating commodity markets and restricted refinancing options. (Reporting by Susan Taylor; editing by Rob Wilson)