The Hindu Business Line : Uranium prices to move up further

Experts believe there could be no respite from a rising market anytime soon and expect prices to have a further upside potential of up to 20 per cent from current levels. Spot prices reached $125 a pound by mid-May.

The surge in uranium prices last four years is underpinned by fundamental tightness - a global uranium market deficit and concerns over future supply.

This follows declines in secondary uranium supply and a lack of investment in new capacity over the past two decades, Macquarie Research Commodities said in its recent report.

Supply risk

Tightening fundamentals as reflected in soaring spot prices have attracted speculators who have pushed prices up. Spot prices are poised to go even higher because of significant deficit in 2007-08 and risk on the supply side.

By the end of 2007, spot prices could rise to $150/lb and will average $125/lb in 2007 and $135/lb in 2008, Macquarie forecast. These average prices would mean the market could potentially move to even $200/lb over the next two years.

The uranium market is expected to remain in large deficit next two years.

There are also uncertainties relating to primary supplies coming online.

High Prices

Most of the growth is likely to come from Kazakhstan, Africa and Canada.

The uncertainty would force reactors to contract for large quantities of future mine supplies in the long-term contract market, experts observed.

By 2010, prices could move lower because of supply response to current high prices; but the market would continue to remain firm and be influenced by hedge funds and speculative forces.