This article
was originally published by Seeking Alpha on September 17, 2014
Summary: The recent bullish trends in the uranium
market are led by supply-side issues. The demand side is also looking
interesting. Is It time to reconsider some well known uranium stocks,
particularly Cameco and Denison Mines?
More than
three years ago, the tsunami in Japan which led towards the Fukushima nuclear
disaster triggered a collapse of the uranium prices, falling from a peak of $65
per pound in early 2011 to less than $30 per pound over the last four months
ending August. However, since the end of last month, the commodity's prices,
for October delivery, have recovered to more than $33 per pound.
Supply-side issues
The
improvement in prices was largely due to supply-side issues. Due to the slump
in prices, Uranium producers from all around the world started cutting back on
their production. Moreover, the Ukraine conflict and the subsequent sanctions
on Russia, which provides a significant portion of uranium enrichment services
to companies all around the world, could also hit uranium supplies.
Finally, last
month, Cameco Corp. (NYSE:CCJ), the largest U.S. listed uranium miner shut down
its flagship McArthur River mine, the biggest in the world, due to a labor
dispute which acted as a major catalyst behind the improvement in uranium
prices. On Friday, the company signed a tentative agreement with the worker's
union, ending the 17-day strike.
The industry
could witness additional closures in the coming months due to the pricing
pressure. Analysts at Macquarie have forecast a 6% drop in production from
mines in the current year. Read full article at Seeking Alpha.
