Uranium Pain Seen Worsening by Paladin as Glut Extends Slump

  • All uranium mines are loss-making at $21 a pound: Paladin CEO
  • Prices decline on Wednesday to lowest level since January 2005

Uranium producers should brace for a longer period of lower prices as the fuel extends its decline to an 11-year low amid a glut, according to Australian miner Paladin Energy Ltd.

Every uranium mine is running at a loss with prices at $21 a pound, said Alexander Molyneux, the chief executive officer of Paladin Energy. The atomic fuel fell to $20.50 on Wednesday, capping a 40 percent decline for the year, according to data from Ux Consulting Co. Prices were last below $21 in January 2005, according to Ux, a provider of research on the nuclear industry.

Uranium is heading for a second annual drop amid a global surplus prolonged by the slower-than-anticipated restart of Japan’s nuclear reactors. The glut is forecast to extend until a rebalancing occurs in 2024, according to RBC Capital Markets, which cut its price estimates through 2020. The fuel may fall below $20 a pound before the U.S. presidential election on Nov. 8, Molyneux said.

“It may climb up to $25 after the election, but it’s still not a great market,” Molyneux said by phone. “It’s going to be low until the nuclear fuel buyers decide that it’s no longer safe to continue running down stockpiles, but it’s impossible to know when that decision will be made. It’s possible that the price will remain at $30 or below until 2019.”

RBC Capital Markets reduced its 2017 uranium price estimate by 21 percent to $27.50 a pound and its 2018 forecast to $35, according to an Oct. 16 note. Prices are unlikely to rebound until at least 2019, according to Russia’s Rosatom Corp., the world’s fourth-largest producer of the nuclear fuel.