Wednesday, October 27, 2010
Uranium stocks will go nuclear
"For a long time, the uranium market was dominated by the liquidation of inventories, both commercial and military in origin. As a result, price was depressed and production and exploration efforts were cut back. Over the same period that production was stagnant, reactor requirements were increasing as utilities were able to increase their capacity factors and uprate their reactors. More recently, new demand is emerging from China, India, and Russia, as these countries seek to dramatically increase their nuclear power capabilities.
As a result of these changes, the excesses of the past market have disappeared. As demand increased and supply disruptions appeared, inventories were consumed at a faster rate. Higher prices and higher demand have changed market attitudes from complacency about future supply to concern. In addition to this transition from an inventory-driven market to a production-driven one, the U.S. dollar has depreciated against producer currencies, meaning the price has to push even higher to find an equilibrium level.
The market that we now find ourselves in is like no other in the history of uranium. Production is far below requirements, which are growing. HEU supplies and the enrichment of tails material make up a large portion of supply, but the fate of these supply sources is uncertain. Supply has become more concentrated, making the market more vulnerable to disruptions if there are any problems with a particular supply source. Another source of market vulnerability is the relatively low level of inventory held by buyers and sellers alike."
There is an incredible demand/supply imbalance forming.
Let me knw your thoughts on this view. Thanks Bob
Posted by bkudla at 5:25 PM