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Uranium price rally – on pause

After weeks of rallying, it seemed a full-scale crash in the uranium price was in the cards Monday. Didn’t happen.

Swinging wildly. That best describes the spot price of uranium – and uranium equities – over the past couple weeks. Spot uranium rocketed up from painful lows in the mid-$20/lb range at the start of the month up to the mid-$40/lb a week ago. 

That stirred interest in uranium miners and juniors alike, boosting share prices across the board, sometimes very significantly.

Resurgent buying of uranium by utilities – albeit in a thin market – fueled the rally, according to analyst reports.  

The rally was short lived, however. 

Earlier this week the spot price of uranium fell sharply – more sharply than it had in years – raising fears it was set to come crashing back down. Between this and last week spot prices suddenly sunk between $4/lb to $6/lb (depending on whose pricing you used, aforementioned figures are respectively by UxC and Trade Tech.) 

Thin trading in an otherwise tight market has that effect and last week it seemed buyers dried up. 

Yet, tentatively, this now appears less a full-scale crash in progress in the uranium spot price, which is largely traded via longer-term contracts, and more a market that has hit the brakes – for now. 

After the heavy sell-off earlier this week the spot price of uranium stabilized holding above $40/lb and even gaining slightly, according to analysts. The spot price of uranium (U3O8) was up from $40/lb to $40.38/lb yesterday, said David Talbot, Senior Mining Analyst at Dundee Capital Markets, in an email Wednesday.

“So despite a quick and drastic sell off at the end of last week, we seem to be moving in the right direction again,” Talbot said.

Talbot, a long-term bull on uranium, expects short-term spot prices to hold steady about where they are now.

“I think we should see a sustained price range in the $40-45/lb range,” he said. 

In the coming years many analysts, Talbot among them, expect the price of uranium to continue making gains to somewhere in the range of $65-$85/lb as mine supply falls behind demand. 

So it is – pausing not crashing – that uranium miners and juniors have held onto most of their gains since the uranium price started moving in early November. Cameco – uranium mining’s bellwether stock – started the month out around C$19/share. It broke C$22/share last week, only to drop notably Monday of this week to mid-C$21/share.

 

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