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7/13/2017 by mdc
Melissa Shaw reports that as of July 3, the U3O8 spot price was at $20.35 per pound, up from $19.85 on June 20 and $19.25 on June 14. Despite that modest uptick, analysts believe the price will not improve much more until 2018. While additional reactors continue to be built in countries like China and India, the effects of the 2011 Fukushima shutdown of their reactors are still being felt although they are slated to be back on line in the next year or so.

Utilities companies have not yet secured new supply contracts for uranium, and threats to supply like Kazakhstan decision to cut output this year have been unable to boost the U3O8 spot price for long. Justin Chan recently explained that ultimately the uranium market remains in a situation where long-term demand exceeds long-term supply but the current situation is that there is more short-term supply than demand.

Government regulations were a major issue for many uranium firms in Q2. Perhaps most notably, the Western Australian ban on uranium mining came into force in late June. One bright spot is that the 4 uranium projects that have already gained approval in the state will be allowed to proceed. They are the Cameco Kintyre and Yeelirrie projects, Vimy Resources Mulga Rock project, and the Toro Energy Wiluna project.

The low U3O8 spot price also caused problems for uranium companies. State-owned Russian nuclear firm Rosatom announced earlier in July that it has applied to suspend development at its Mkuju River project in Tanzania due to the depressed price. The project is managed by Rosatom-owned Uranium One through its subsidiary Mantra Tanzania.

In its Q3 mining and metals outlook, RBC predicts that the U3O8 spot price will stay between $20 and $25 through 2018, after which time cost-curve economics will boost the price to between $30 and $40 from 2019 to 2021.

After 2021, the investment bank expects the market to move toward a deficit, bringing up the U3O8 spot price rapidly.

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