The Energy Report: During your last
interview with us in May, spot uranium was around $51 per pound
($51/lb), with some apparent stability at that level. Now spot is
~$42.50/lb. What's the source of the downward pressure?
Rob Chang:
The excess inventory that was available for sale, most notably from
Japan, has been going back into the market, depressing spot prices.
Plus, the general market malaise surrounding the commodity contributed
as well. But that has notably changed in recent months.
TER:
Could a major short-term catalyst move uranium prices higher in the
near future, or do you expect a gradual increase over time?
RC:
This is the year the well-publicized U.S.-Russian HEU (highly enriched
uranium) agreement, or Megatons to Megawatts program, is due to expire.
Those 24 million pounds (Mlb) that were available to the market will
effectively disappear. The question remains as to what the Russians will
do with the remaining material. Our sources and thinking suggest the
Russians are probably going to stockpile this material. It's not very
cost-effective for them to downblend it, given the low uranium price
environment. On top of that, it's a security-of-supply issue. We're
forecasting a supply deficit up to 2025, and believe the Russians see
the same thing. So it makes sense for the country to keep it in its
inventory, rather than to downblend it now. There are no substitutes for
uranium in nuclear plants, so to continue operating, it's really
important to have a supply of uranium.(more)
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