Uranium supplies will exceed demand through 2012 and there is “limited upside” to prices for at least six months, London-based research company CRU said.
Nuclear power plants, the biggest consumer of uranium, are “well covered” with supplies, CRU associate consultant Richard Schodde said in a presentation today for the Australian Uranium Conference in Fremantle, Western Australia. Prices have dropped 6.2 percent this year to $41.75 a pound, according to Roswell, Georgia-based Ux Consulting Co.
There is “limited upside to the spot price over the next six to eight months,” Schodde said in the presentation. Production costs at about $40 a pound limit “the potential for further price declines.”
Uranium prices have dropped from a record $136 a pound in 2007 as producers increased output. The market returned to surplus in 2009 and will probably stay there until a shortage in 2013 as demand, particularly from China, picks up, Schodde said. Prices may exceed $50 a pound in 2012 and keep rising in 2013, according to the presentation.
Demand is expected to increase by 46 percent over the next decade, mainly driven by China, according to CRU. “China’s propensity for heavy and early stockpiling will also influence the market,” Schodde said in the presentation.
Supplies from dismantled nuclear weapons and other sources not directly from mines will fall to 13 percent of demand by 2020 from 27 percent last year, he said.
Mine supply is expected to grow primarily in Namibia, Niger and Kazakhstan, he said. By 2030, the projected supply from mines may lag behind demand by as much as 30,000 tons as demand doubles, according to CRU.
This year production is expected to rise to 55,000 tons from 50,772 tons last year, according to data from the World Nuclear Association.