uranium stocks soar as china builds supplies

Uranium stocks soar as China builds supplies

Dan Hall

Uranium stocks around the world continued to soar this week on the back of rising demand for uranium in China.

Overnight, securities in US and Canada focused Cameco increased around 5.5 per cent, South African uranium and gold producer First Uranium has shot up 8.5 per cent, Canadian exploration and development company UEX rocketed 15 per cent, US miner benison Mines increased 5.7 per cent and Paladin Energy 2.5 per cent, the Commonwealth Bank reported on Wednesday.

CBA analysts said the stocks are getting a lift after investment bank RBC Capital said the uranium market has swung from oversupply to undersupply in just a few months as China begins buying long-term supplies for new reactors.

Closer to home shares in uranium explorer Energy Metals have increased around 5 per cent since last Friday to around 74 cents, while shares in uranium equities have shot up by a whopping 15 per cent since last Friday after strong gains in September and October.

Chinese media reports suggest that the Asian giant plans to build 60 per cent more megawatts of nuclear power by 2020 than previously thought.

RBC says uranium spot prices will nearly double by 2012 swinging uranium equities into a multi-year bull market.

Macquarie Bank commodity analysts based in London say there is an increasing divergence between the implied price of uranium and uranium spot prices, a sign of further growth in spot prices.

"The implied price of uranium for Uranium Participation Corporation (a uranium exchange-traded fund) has risen to almost $US63 a pound, while the spot price is trading around $US57 a point," Macquarie's commodities research team said.

"This is the first time that the implied price has been this far above the post price since November 2009, when the implied price was $US50 a pound and the spot price was $US43 a pound."

The Australian Financial Review
Published Online 10 November 2010
http://www.afr.com/p/business/companies/uranium_stocks_soar_as_china_builds_iS0lFX2uCeT7NgBlwShVaK?hl