Uranium price forecast: Dundee Capital Markets Dundee Capital Markets has a slightly higher outlook for the spot price in 2016, and expects it to reach US$55 per pound. As for 2017 and 2018, the firm expects the price to flatline at $65 per pound. In regards to term volume, which according to Senior Analyst David Talbot is anything contracted for longer than 12 months, contracts made in 2016 should fall in the $65-per-pound range; for 2015, the firm expects term volume to be $58 per pound. "Following a contraction below the $10 per pound historical average when spot hit US$44.00 per pound with term flat at US$45.00, the term market reacted with term prices rising to US$49 per pound. Term hasn’t shifted from that level since although spot has settled to reflect a widening of the spread," Talbot said in a research note. "Term activity has been somewhat slow this year but soon to-be US ISR producer Peninsula Energy (ASX
EN) negotiated contracts at US$49 per pound in December 2014. With only 80 million pounds term volume over the past two years, we believe that contracting must accelerate to offset the nearly 360 million pounds of uranium used in nuclear reactors over the same period. The 2016-17-18 period sees a tremendous increase in uncovered demand."
When Cantor Fitzgerald released its Quarterly Commodity Outlook at the end of July, it noted that in Q2 2015, the uranium spot price came in under its estimate of US$40 per pound, instead hitting US$36.79. At the time, Senior Analyst Rob Chang explained that the lower price was mainly due to utilities refraining from both signing contracts and buying. “The buyers themselves know the prices are going to be a lot higher and they fully see that in the future they are going to pay a lot more — double, maybe even triple. But it is a bureaucracy, they need to get approvals from others, and it’s difficult to justify to the senior board to lock in a contract at US$45, US$50, US$60 when you can just as easily walk into the market right now and buy it for US$36. And they have been right so far,” Chang said, adding that the premise that ample inventory is readily available has also kept buying at bay. While the firm's Q2 prediction missed the mark slightly, Cantor Fitzgerald is still firm on its spot price predictions for the next three years, and expects to see the price at US$50 in 2016, US$60 in 2017 and US$70 in 2018. Chang said he expects it will be sales contracts from utilities that move the price in the short term. “At some point, someone is going to have to jump in and buy and others will do the same — the spot market is so thin that it will show. Just like last year, when a few buyers came in it went from US$28 to the US$40 range really quickly,” he said.
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