Uranium spot price to stay around US$40: RCR
Resource Capital Research (RCR) has predicted the spot price of uranium will trade between US$40/lb and US$45/lb for some time, according to its latest quarterly report covering 16 global uranium companies.
Image courtesy of Paladin Resources
“Traders indicate a floor price of around US$40/lb seems to be holding well but there is no significant utility demand to drive the market up. Timing of purchases from China remains the unknown and has the potential to influence short-term price trends,” said, John Wilson, managing director of RCR.
RCR’s March uranium report shows the market valuation of Australian companies with one or more uranium projects is up 6 per cent over the past month, up 8 per cent over the past three months, and up 173 per cent over the past 12 months. This compares with Canadian companies with one or more uranium projects, up 6 per cent over the past month, up 16 per cent over the past 3 months, and up 136 per cent over the past 12 months.
The uranium spot price is currently trading at US$41.25/lb, down 8 per cent from three months ago (US$45.00/lb) and compares with US$52.50/lb at year end December 2008.
The Fund Implied Price (FIP) is US$42.50/lb, which compares with US$41.40/lb at year end December 2008.
“Our view is in part informed by the FIP, which at US$42.50/lb suggests modest further near term upside from the recent spot price low of US$40.50/lb,” RCR’s report stated.
Since August 2009 the FIP has been reasonably stable, trading in a range of ~US$40/lb to ~US$49/lb.
“In the absence of unexpected exogenous shocks we anticipate no strong drivers to influence the market outlook through 2010. Utility purchases remain discretionary though timing of demand from long-term Chinese inventory build remains a factor with potential to influence short-term market trends.”
In the past month, the uranium mining majors have had mixed share price performance, with DML being the standout performer to the upside: Cameco is down 8 per cent, Denison Mines is up 16 per cent, Uranium One is down 14 per cent, Energy Resources of Australia (ERA) is up 3 per cent and Paladin is up 1%.
The Merrill Lynch Uranium Equity Index (a basket of uranium equities) is up 8 per cent over the past month, up 4 per cent over 3 months and up 24 per cent over the past 12 months.
To access the free summary report or to purchase the complete 94 page comprehensive report, visit: www.rcresearch.com.au/reports