|Henry Lazenby reports that while global economic growth came in at a disappointing 2.3% in 2016, and with growth for 2017 pegged at 2.5% and 2.7% for 2018, several analysts outlined bullish long-term scenarios for base and precious metals, pointing to growing supply gaps from 2020 onwards in key economic inputs.|
There is some question whether the $1-trillion infrastructure plan promised by the new U.S. President will materialize, noting, however, that it paled in comparison with about $3-trillion in spending plans announced by China. He noted, moreover, that retaliatory measures could lead to a trade war between the two key trade partners, risking disruption and currency volatility.
U.S. gains are driven by the labor market. The verdict is out on whether the new U.S. policies will support further acceleration or lead to the next downturn. Risks are high. Despite the new normal being slower global economic growth on the back of an ageing workforce, urbanization is expected to create significant new metals demand.
Ux Consulting Nicolas Carter outlined a dire year for uranium in 2016, citing weak market demand, strong production totals and elevated secondary supplies contributing to a price decline, which saw a supply overhang of more than 18-million pounds in a 208-million pound market. 2017 will show some improvement in the price.
Abundant low-cost supplies, continued slow progress in the restart of Japanese nuclear reactors following the Fukushima disaster, lower utility demand owing to high inventories and a strong U.S. dollar weighed on the price of yellowcake.
The analyst expects the 12-month price outlook to range between $18 per lb and $28 per lb, finding a support level at $28 per lb. He sees a supply overhang of 16-million pounds this year, highlighting the need for more production cuts, while new production at Namibian Husab mine is ramping up to add 15-million pounds a year to the already oversupplied market.
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