Uranium price update thread
- Thread starter lancer
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Thanks lancer.
I believe the "long term" contract price is $85 while spot is a good deal higher.
I believe the "long term" contract price is $85 while spot is a good deal higher.
Hi Rederob,
If you say that the long term U3o8 price is $85 at the moment when its $113 then what will you say the long term price is when u3o8 hits $150? Apparently u3o8 remains competitively priced alongside coal at this price. If demand is going to continue to outstrip supply until at least 2010 and that would be very conservative given the length of time that new mines go into production and the initial over estimation of production capacity of these mines as production problems are a common occurance this should mean that the price should remain at $150 minimum for many years to come IMO.
What do you class as long term? 5 yrs perhaps? I can't see u308 being at $85 any time over the next 2 yrs.
Whats your methodology for this assessment?
Best regards
Champ
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Champ
I barely understand the uranium market, although have a reasonable clue about its supply/demand fundamentals.
For your info, the respected source for uranium prices is found here:
http://www.uranium.info/prices/longterm.html
In relation to longer term price structures and unit costs via various energy sources, you can find some excellent articles by googling: They are beyond me.
The problems we have in trying to guess a maximum price for uranium is that it needs to be compared with a moving feast of prices for natural gas, oil, coal and (to a lesser extent) wind.
Then add to this the fact that each nation MUST have a "mix" of generating capacity - just in case!!!
My personal view, atm, is that uranium prices can very comfortably rise above $200 next year and remain extremely cost competitive with other fuel types.
Note that coal remains uranium's natural competitor, but in future years may have inbuilt "clean coal cost premiums" so that global warming sensitivities are ameliorated.
I disclose reasonable long term interests (2010-2014) in Mee (acquired at AU$.13) and Cameco (acquired at US$39 and payng a minor dividend) (see other thread for reasons, my only junior and senior uranium and gold plays respectively).
The time frame reflects the IAEE survey as to when uranium prices are likely to reduce to the US$60-70 range.
The most recent spot price of US$113 (reported by Trade-Tech etc) was a one of auction and I also understand that long terms contracts are generally in the US$55-80 range, but that some hedge funds have bought interests in the US$100 range. Interestingly analysts including Trade Tech predict rises to US$135 over the next 18 months, with a reduction not commencing until Cigar Lake comes on line in 2010, barring futher accident to it, Ranger etc. It may be that the three mines policy may change that, but a 2-3 year start up is still likely for new mines. Best wishes.
The time frame reflects the IAEE survey as to when uranium prices are likely to reduce to the US$60-70 range.
The most recent spot price of US$113 (reported by Trade-Tech etc) was a one of auction and I also understand that long terms contracts are generally in the US$55-80 range, but that some hedge funds have bought interests in the US$100 range. Interestingly analysts including Trade Tech predict rises to US$135 over the next 18 months, with a reduction not commencing until Cigar Lake comes on line in 2010, barring futher accident to it, Ranger etc. It may be that the three mines policy may change that, but a 2-3 year start up is still likely for new mines. Best wishes.
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True.
Although when a one-off auction is so fiercely bid, it tells you there are problems in the immediate market.
Note also the subtle distinction between long term contracts and long term contract prices.
The former relate to supply contracts negotiated in the past - typically at a huge discount to present spot - and could be many years old by now and soon due to be renegotiated.
The latter relates to newly negotiated contracts over a reasonable term (generally many years), and the price agreed. Typically they are set against recent past month spot price highs.
The other aspect of future pricing forecasts that needs to be understood is that while it is possible they might fall in 5-10 years time, it is equally possible they might be significantly higher.
BHP's Olympic Dam may not ramp up at the required rate, and Cigar Lake may not ever realise it potential.
Then again the rate of construction of nuclear plants could be equally variable, although the consensus suggest more and not less.
Agreed. I only follow a few of the uranium price contracting experts (there are only a very limted number and they are beset with a degree of uncertainty). However as you suggest there is a distortion in the market and it has some potential to last and increase.
I think Cameco for example has long terms contracts negotiated several years ago for US$16-30 lb, but is soon to be renegotaing some at much higher prices.
The high spot prices have been a boon for the non-fully contracted companies like Paladin, who have taken advantage of them, and will be for the share price of the (relatively few) ASX / TSX juniors with genuine uranium ability or prospects (as opposed to some of the current range of oversubscribed IPO's and listings with limited and undiversified assets and licences with <200 ppb, which is still not likely economic I suspect).
I might add by way of editing, that the cost of uranium is only a very very small part of the overall cost of exploring, building a reactor and the ongoing meeting of operations, regulatory and other issues, hence the explaination by some experts that a high price of uranium is not a concern, so long as there is a good supply.
I think Cameco for example has long terms contracts negotiated several years ago for US$16-30 lb, but is soon to be renegotaing some at much higher prices.
The high spot prices have been a boon for the non-fully contracted companies like Paladin, who have taken advantage of them, and will be for the share price of the (relatively few) ASX / TSX juniors with genuine uranium ability or prospects (as opposed to some of the current range of oversubscribed IPO's and listings with limited and undiversified assets and licences with <200 ppb, which is still not likely economic I suspect).
I might add by way of editing, that the cost of uranium is only a very very small part of the overall cost of exploring, building a reactor and the ongoing meeting of operations, regulatory and other issues, hence the explaination by some experts that a high price of uranium is not a concern, so long as there is a good supply.
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Just incase you's wern't aware, uranium is going to be added to the futures market on May 6.
See Below:
NYMEX Partners With UX Consulting To Offer Uranium Futures Contracts
16/04/07
The New York Mercantile Exchange, Inc., a subsidiary of NYMEX Holdings, Inc. (NYSE:NMX), the world's largest physical commodity exchange, today signed a 10–year agreement with the Ux Consulting Company, LLC (UxC), the global uranium pricing index and information leader, to introduce on and off-exchange traded uranium futures products on the CME Globex ® and NYMEX ClearPort ® electronic platforms on May 6 for trade date May 7.
NYMEX and UxC will work together to provide marketing and education for these financially settled contracts, which will serve as the pricing benchmark for this rapidly growing industry.
NYMEX Chairman Richard Schaeffer said, "We are excited to introduce uranium futures contracts and to provide the industry with a transparent price discovery mechanism. We expect to create a benchmark contract for this important and underserved global market. NYMEX is gratified to launch innovative products, and uranium is uniquely positioned to act as a complement to both our energy and metals product offerings. We are proud to partner with Ux Consulting, the recognized market leader."
UxC President Jeff Combs said "The experience this decade has clearly indicated that the uranium market would benefit from additional price transparency, especially in terms of forward prices, as market participants formulate budget and investment decisions in this critical period of a renaissance in nuclear power. We are pleased to partner with NYMEX, the global leader in commodities–based futures trading, in the introduction of uranium futures products, and applaud NYMEX for investing the time and resources necessary to make uranium futures a reality."
About NYMEX Holdings, Inc.
See Below:
NYMEX Partners With UX Consulting To Offer Uranium Futures Contracts
16/04/07
The New York Mercantile Exchange, Inc., a subsidiary of NYMEX Holdings, Inc. (NYSE:NMX), the world's largest physical commodity exchange, today signed a 10–year agreement with the Ux Consulting Company, LLC (UxC), the global uranium pricing index and information leader, to introduce on and off-exchange traded uranium futures products on the CME Globex ® and NYMEX ClearPort ® electronic platforms on May 6 for trade date May 7.
NYMEX and UxC will work together to provide marketing and education for these financially settled contracts, which will serve as the pricing benchmark for this rapidly growing industry.
NYMEX Chairman Richard Schaeffer said, "We are excited to introduce uranium futures contracts and to provide the industry with a transparent price discovery mechanism. We expect to create a benchmark contract for this important and underserved global market. NYMEX is gratified to launch innovative products, and uranium is uniquely positioned to act as a complement to both our energy and metals product offerings. We are proud to partner with Ux Consulting, the recognized market leader."
UxC President Jeff Combs said "The experience this decade has clearly indicated that the uranium market would benefit from additional price transparency, especially in terms of forward prices, as market participants formulate budget and investment decisions in this critical period of a renaissance in nuclear power. We are pleased to partner with NYMEX, the global leader in commodities–based futures trading, in the introduction of uranium futures products, and applaud NYMEX for investing the time and resources necessary to make uranium futures a reality."
About NYMEX Holdings, Inc.
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Uranium price to hit $140/lb: analysts
--------------------------------------------------------------------------------
Thursday, 29 March 2007
Kate Haycock
EQUITY researcher Resource Capital Research has released a report suggesting that the spot price for uranium could reach $US125 a pound some time this year and $140/lb by September 2008 – an increase of 47% over the current spot price of $95/lb.
RCR managing director and analyst John Wilson said the main factor driving the price higher was a strong growth in new nuclear reactors, and with at least 48 new power reactors expected to be commissioned by 2013, the price indicators all suggested that uranium would be heading to even further record highs.
"Uranium price indicators continue to strengthen and are currently at all-time highs," Wilson said.
"Sector fundamentals are being driven by new reactor announcements, reactor power uprates and life extensions, investor and producer buying, and supply disruptions at Ranger and Cigar Lake."
The Cigar Lake floods are expected to delay production at Cameco's Canada mine until 2010, while Energy Resources Australia's Northern Territory Ranger uranium mine was also hit by heavy rains earlier this year and production is anticipated to be down some 20-30% in the first quarter of this year.
On the upside for future uranium production, RCR said it anticipated the three mines policy of the ALP would be reversed in April, which would benefit companies with advanced projects especially in Queensland and South Australia. The Western Australia stance banning uranium mining was also "unsustainable" in the mid-term future.
Hartley's resources analyst Andrew Muir told MiningNews.Net that these price forecasts were not out of line.
"Considering where [uranium] has come from, going up an extra $40-50 a pound within one to two years is not unreasonable, given supply and demand issues," he said.
"Supply is tight and there aren't many significant new mines coming onstream, and there are a lot of new reactors being proposed and built."
He also indicated that the future was looking good for uranium plays in Australia, especially companies with advanced projects, with the proviso that the ALP will need to reverse its three mines policy.
Muir said the market had priced in the expectation that the politics will change and did not expect overheated market prices for uranium stocks in the wake of the potential Labor policy change.
"Obviously, companies which are closer to production when this happens will gain a premium," he said.
RCR's figures from 140 Australian uranium juniors showed that they had jumped up 23% over the past three months and 122% over the past 12 months, compared to a selection of Canadian juniors, which were down 2% over the past month and up 75% over the past 12 months.
The majority of the 48 new reactors under development will be located in Asia – 13 in China, eight in India, six in South Korea and three in Japan. Russia is also commissioning eight new reactors, RCR said.
The total power output of the reactors will be 43.5 gigawatts electric, compared with 435 nuclear reactors currently in operation with an aggregate generation capacity of 370GW electric – representing an 11% increase in power generation over the next six years.
--------------------------------------------------------------------------------
Thursday, 29 March 2007
Kate Haycock
EQUITY researcher Resource Capital Research has released a report suggesting that the spot price for uranium could reach $US125 a pound some time this year and $140/lb by September 2008 – an increase of 47% over the current spot price of $95/lb.
RCR managing director and analyst John Wilson said the main factor driving the price higher was a strong growth in new nuclear reactors, and with at least 48 new power reactors expected to be commissioned by 2013, the price indicators all suggested that uranium would be heading to even further record highs.
"Uranium price indicators continue to strengthen and are currently at all-time highs," Wilson said.
"Sector fundamentals are being driven by new reactor announcements, reactor power uprates and life extensions, investor and producer buying, and supply disruptions at Ranger and Cigar Lake."
The Cigar Lake floods are expected to delay production at Cameco's Canada mine until 2010, while Energy Resources Australia's Northern Territory Ranger uranium mine was also hit by heavy rains earlier this year and production is anticipated to be down some 20-30% in the first quarter of this year.
On the upside for future uranium production, RCR said it anticipated the three mines policy of the ALP would be reversed in April, which would benefit companies with advanced projects especially in Queensland and South Australia. The Western Australia stance banning uranium mining was also "unsustainable" in the mid-term future.
Hartley's resources analyst Andrew Muir told MiningNews.Net that these price forecasts were not out of line.
"Considering where [uranium] has come from, going up an extra $40-50 a pound within one to two years is not unreasonable, given supply and demand issues," he said.
"Supply is tight and there aren't many significant new mines coming onstream, and there are a lot of new reactors being proposed and built."
He also indicated that the future was looking good for uranium plays in Australia, especially companies with advanced projects, with the proviso that the ALP will need to reverse its three mines policy.
Muir said the market had priced in the expectation that the politics will change and did not expect overheated market prices for uranium stocks in the wake of the potential Labor policy change.
"Obviously, companies which are closer to production when this happens will gain a premium," he said.
RCR's figures from 140 Australian uranium juniors showed that they had jumped up 23% over the past three months and 122% over the past 12 months, compared to a selection of Canadian juniors, which were down 2% over the past month and up 75% over the past 12 months.
The majority of the 48 new reactors under development will be located in Asia – 13 in China, eight in India, six in South Korea and three in Japan. Russia is also commissioning eight new reactors, RCR said.
The total power output of the reactors will be 43.5 gigawatts electric, compared with 435 nuclear reactors currently in operation with an aggregate generation capacity of 370GW electric – representing an 11% increase in power generation over the next six years.
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I don't really care to read an article a month old given that uranium prices are already near the touted price.
If you are not smart enough to have your own opinion, don't be so silly to trot out old news.
If you are not smart enough to have your own opinion, don't be so silly to trot out old news.
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Hi doyoureallycare, Thanks for the articles posted; They were very interesting and I look forward to your future posts. - Cheers
Tend to agree.
I cant wait until uranium begins trading publically in the futures market. Euphoria in uranium stocks, here we come!
professor_frink
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Tend to agree.
I cant wait until uranium begins trading publically in the futures market. Euphoria in uranium stocks, here we come!
What makes you think that Nizar?
I think the futures trading has risks, in the near term. Possession cannot be taken of the physical commodity, and the physical users of uranium are very limited and have existing relationships and contracts with suppliers, in many cases.
Until such time as physical users commence involvement with trading (which is not their core business and may occur over a medium time frame) the market will, I think, likely be driven by speculators and small or higher risk funds. Trading may be quite spare to begin with and, of course, the futures trading was set up as a result of speculation, rather than demand by traditional buyers. Transparancy might not be a good thing and may also bring with it greater understanding that long terrms contract rates are significantly less than spot rates.
What we could see in the near term is the equalivant of small cap share trading, where small quantities dictate high changes in prices. That high volatility may be both up and down, and make short term uranium investing a bumpy ride, and conversely offer short term profit (and loss) opportunities for uranium share investments.
Perhaps more helpfully for Australian uranium stocks, Bloomberg International and Reuters are now according coverage to the proposed ALP mines policy, which has no doubt been factored in for Australian investors, and overseas uranium followers, but perhaps not by more general overseas investors who have yet to follow uranium. If the change occurs, and especially given that Howard is today expected to announce plans for uranium enrichment and power generation in Australia, then they might combine to focus some generalist international investors interest on Australian uranium stocks.
In other areas (ie non mining where there are political decisions make that affect investment decisions) such interest often results in significant share price effects 2-6 months later, being the time frame required for larger, and more conservative, funds and advisors to conduct research, advise clients etc. It was only last month that one of the international brokerages announced a "watch" rating on the uranium sector as a whole.
Until such time as physical users commence involvement with trading (which is not their core business and may occur over a medium time frame) the market will, I think, likely be driven by speculators and small or higher risk funds. Trading may be quite spare to begin with and, of course, the futures trading was set up as a result of speculation, rather than demand by traditional buyers. Transparancy might not be a good thing and may also bring with it greater understanding that long terrms contract rates are significantly less than spot rates.
What we could see in the near term is the equalivant of small cap share trading, where small quantities dictate high changes in prices. That high volatility may be both up and down, and make short term uranium investing a bumpy ride, and conversely offer short term profit (and loss) opportunities for uranium share investments.
Perhaps more helpfully for Australian uranium stocks, Bloomberg International and Reuters are now according coverage to the proposed ALP mines policy, which has no doubt been factored in for Australian investors, and overseas uranium followers, but perhaps not by more general overseas investors who have yet to follow uranium. If the change occurs, and especially given that Howard is today expected to announce plans for uranium enrichment and power generation in Australia, then they might combine to focus some generalist international investors interest on Australian uranium stocks.
In other areas (ie non mining where there are political decisions make that affect investment decisions) such interest often results in significant share price effects 2-6 months later, being the time frame required for larger, and more conservative, funds and advisors to conduct research, advise clients etc. It was only last month that one of the international brokerages announced a "watch" rating on the uranium sector as a whole.
Uranium market is pretty tight.
This will increase the liquidity and bring a whole other class of buyers into the uranium market. It wont just be 100k lb auctions every fortnight anymore.
The best way to get leverage to a rising uranium spot price is through the stocks IMO, especially those looking to or already are producing.
Maybe the blow-off for uranium will come this year?
Who knows.
But there will be a supply deficit until at least 2010 so from a fundamentally it should remain high until then.
It would be nice if we have a peak this year of US$300/lb and then maybe consolidation and long-term price of US$150/lb
http://www.marketwatch.com/news/sto...x?guid={04534340-989E-43ED-B93D-1CEC856F39BF}
Any changes made at the ALP Conference in favour of increased uranium mining may well increase interest from overseas companies looking for Australian uranium projects especially in SA and NT. As for WA and Qld, the state govts are still firmly opposed to uranium mining. Their backward attitudes may change down the track. However, I think that most investors here already expect a change in policy at the ALP Conference anyhow.
The market's reaction on Monday will be very interesting.
DYOR
professor_frink
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Uranium market is pretty tight.
This will increase the liquidity and bring a whole other class of buyers into the uranium market. It wont just be 100k lb auctions every fortnight anymore.
The best way to get leverage to a rising uranium spot price is through the stocks IMO, especially those looking to or already are producing.
Maybe the blow-off for uranium will come this year?
Who knows.
But there will be a supply deficit until at least 2010 so from a fundamentally it should remain high until then.
It would be nice if we have a peak this year of US$300/lb and then maybe consolidation and long-term price of US$150/lb
http://www.marketwatch.com/news/sto...x?guid={04534340-989E-43ED-B93D-1CEC856F39BF}
Cheers for the article Nizar, I don't have much info on it at the moment
From the article-
Completely agree with that statement. Will be interesting to see how it all goes
FYI:
Prime Minister John Howard on Saturday promised to remove all excessive restrictions on mining, processing and exporting of Australian uranium as a possible step to embarking on domestic nuclear power generation
Mr Howard said expert advice to the government clearly showed Australia was giving up a major economic opportunity as a result of the excessive barriers on uranium mining and export.
He said a key theme of that advice was that Australia should do what it could to expand uranium exports and remove unnecessary barriers that were impeding efficient operation and growth of the industry.
Prime Minister John Howard on Saturday promised to remove all excessive restrictions on mining, processing and exporting of Australian uranium as a possible step to embarking on domestic nuclear power generation
Mr Howard said expert advice to the government clearly showed Australia was giving up a major economic opportunity as a result of the excessive barriers on uranium mining and export.
He said a key theme of that advice was that Australia should do what it could to expand uranium exports and remove unnecessary barriers that were impeding efficient operation and growth of the industry.
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NYMEX uranium futures survey results
More Interest in Uranium, More Volatility in Price
Over the past week, we’ve spoken to several industry experts about the impact of uranium futures on the uranium price. Will it work? Yellowcake Mining director Dr. Robert Rich, who has spent several decades in every aspect of the nuclear fuel cycle, talked to a number of utility executives at the recent nuclear fuel conference in Budapest. He felt they were pretty excited about the prospects for uranium futures trading. “It may be too early to tell,” Dr. Rich told us, “but I think futures trading shows promise.”
In a prepared response, TradeTech chief executive Gene Clark wrote of those he has talked with, “The most interested parties have been the electric utility company fuel managers, who seem to be willing to try anything new that will give them the power to halt the price run-up.” He also pointed out utility fuel managers have “little, if any, experience in such (futures) markets.”
By contrast, after having discussed futures trading with professional traders, Dr. Clark wrote, “The folks we talked to, who have the most experience in these types of markets, are the most skeptical.” He explained, “They don’t see how such a market could take hold, given (in their words) ‘the lack of the basic elements for such a market to evolve.’” He cited the absence of a ‘liquid spot market and absence of a linkage to the physical market for the commodity.’
Dr. Clark also pointed out an interesting observation, “The NYMEX futures market potentially sets the stage for a very interesting battle between the traditional market participants and a new set of players. The traditional players have no interest in transparency and liquidity. In fact, that’s how they make their money – by making sure it is transparent only to themselves as individual parties.”
Clark’s conclusion, “Utility fuel managers want to use futures trading to hedge their upside price risk, while potential sellers generally expect prices to keep rising precipitously.”
http://www.stockinterview.com/News/...rvey.html?section=news&action=detail&id=66356
Also includes a poll on some gereral questions regarding uranium futures trading.
Kick Off May 7th
More Interest in Uranium, More Volatility in Price
Over the past week, we’ve spoken to several industry experts about the impact of uranium futures on the uranium price. Will it work? Yellowcake Mining director Dr. Robert Rich, who has spent several decades in every aspect of the nuclear fuel cycle, talked to a number of utility executives at the recent nuclear fuel conference in Budapest. He felt they were pretty excited about the prospects for uranium futures trading. “It may be too early to tell,” Dr. Rich told us, “but I think futures trading shows promise.”
In a prepared response, TradeTech chief executive Gene Clark wrote of those he has talked with, “The most interested parties have been the electric utility company fuel managers, who seem to be willing to try anything new that will give them the power to halt the price run-up.” He also pointed out utility fuel managers have “little, if any, experience in such (futures) markets.”
By contrast, after having discussed futures trading with professional traders, Dr. Clark wrote, “The folks we talked to, who have the most experience in these types of markets, are the most skeptical.” He explained, “They don’t see how such a market could take hold, given (in their words) ‘the lack of the basic elements for such a market to evolve.’” He cited the absence of a ‘liquid spot market and absence of a linkage to the physical market for the commodity.’
Dr. Clark also pointed out an interesting observation, “The NYMEX futures market potentially sets the stage for a very interesting battle between the traditional market participants and a new set of players. The traditional players have no interest in transparency and liquidity. In fact, that’s how they make their money – by making sure it is transparent only to themselves as individual parties.”
Clark’s conclusion, “Utility fuel managers want to use futures trading to hedge their upside price risk, while potential sellers generally expect prices to keep rising precipitously.”
http://www.stockinterview.com/News/...rvey.html?section=news&action=detail&id=66356
Also includes a poll on some gereral questions regarding uranium futures trading.
Kick Off May 7th
From the New York Post:
In a bet on the revival of nuclear energy, Wall Street giants including Goldman Sachs and Morgan Stanley are set to move mountains of cash into uranium when it starts trading on the New York Mercantile Exchange next month.
The price of uranium has skyrocketed over the past year from around $40 a pound to around $113 as demand has outstripped supply. Goldman and other investors including hedge funds see big opportunities trading uranium because of its high level of volatility.
In a bet on the revival of nuclear energy, Wall Street giants including Goldman Sachs and Morgan Stanley are set to move mountains of cash into uranium when it starts trading on the New York Mercantile Exchange next month.
The price of uranium has skyrocketed over the past year from around $40 a pound to around $113 as demand has outstripped supply. Goldman and other investors including hedge funds see big opportunities trading uranium because of its high level of volatility.
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