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Uranium Price Stability Predicted

In the past six months, the uranium spot market has broken through two price barriers. In March 2006, the price for uranium rose above $40 per pound U3O8 for the first time since January 1980. The uranium price first reached $40 in April 1976 and remained in the $40 range until January 1980. However, the market in the late 1970s was considerably different than today?s uranium market, which begs the question: Is today?s record price level of uranium sustainable?

?We think it is,? said Treva Klingbiel, president of TradeTech, a nuclear energy market consultant. ?After years of industry consolidation and tight financial conditions, uranium exploration has suffered and there will be a time lag, perhaps as long as five to seven years, before the supply side can fully respond. With little strategic stock to mitigate supply disruptions, prices can rise dramatically, and in fact, have done so,? Klingbiel says.

Since 1990 uranium requirements have outstripped uranium production. World uranium requirements are expected to increase steadily throughout the next decade to a peak of over 200 million pounds U3O8, according to TradeTech. Uranium producers are gearing up for this added demand. A number of existing producers are planning for expansion, while new junior producers are preparing for uranium exploration and production.