The Weekly Dig - May 26, 2017

by Mick Carew, PhD, mcarew@haywood.com, Emma Boggio, MSC, CPA and CA, and The Haywood Mining Team

Uranium Prices Dip Further as Supply Glut Continues

Highlights: 

It was a tough week for uranium prices, with the UxC Broker Average Price (BAP) falling 10%, and dropping below the $20.00 per pound level for the first time since December last year. The last 6 months have been volatile for uranium, with prices coming off multi-year lows late last year before rebounding 50% to almost $27 per pound in February; the sudden rise in uranium prices earlier this year took many by surprise, with some commentators suggesting the bottom was ‘in’ for uranium prices just as they peaked in February, before retracing about 26% in recent months, setting a new 2017 low this week. However, the longer-term downward trajectory of uranium prices suggests there is still some time to go before a rebalancing of supply-demand fundamentals takes hold. While most of Japan nuclear reactors remain offline, it was TEPCO’s declaration of force majeur in February on a key uranium contract that illustrated the state of the uranium market. Despite recent price movement, long-term fundamentals for uranium demand continue to improve, with 20 new reactors connected to the grid in the last 2 years, and the global reactor fleet generating capacity at an all-time high. The BAP finished at $19.62 per pound on Friday. Meanwhile, precious metal prices continued to rise, with each of gold (up 0.87%), silver (up 2.72%), platinum (up 2.11%) and palladium (up 3.94%) finishing at $1,267, $17.34, $960 and $792 per ounce respectively. Last weeks terrorist attack in Manchester and tensions amongst the Group of 7 countries at a meeting in Sicily, particularly between the U.S. and the remaining 6, continued the air of geopolitical uncertainty. Base metal prices were mixed this week; copper (down 0.48%) and nickel (down 3.15%) were lower, while lead and zinc were up 1.45% and 1.03% respectively. Finally, WTI Crude was trading at $50 per barrel on Friday.

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