Uranium doldrums
Since 2011, the uranium market has not been faring as well as market watchers hoped. Uranium prices have been on a downward spiral since the Fukushima disaster, and though they held steady for some of 2013, they have since come down to $28.25, with the sad reality being that they could fall further.
Mining Australia notes that analysts are pessimistic, seeing a recovery only likely after 2021 due to an excess in uranium inventories.
At their current level, uranium prices are not sustainable to profitable production for most companies. Indeed, even Cameco (TSX:CCO12) has deferred one of its projects until the pricing environment becomes more favorable. And, if producers are having a tough go at it, then surely the smaller development and exploration companies are also struggling to keep going.
If uranium prices do linger at these lower levels, it stands to reason that the market will be seeing less development of uranium projects and more shutdowns of producing projects. The bright side is that should that come to pass, then soon enough the oversupply story will become one of undersupply, leaving utilities scrambling to secure uranium for their reactors and creating a bigger push to revive the sector.
