Categories: Energy / General Market Commentary
Topics: General Energy / General Market Commentary

Pent-Up Uranium Bull Will Eventually Explode Higher by Nick Hodge

Pent-Up Uranium Bull Will Eventually Explode Higher

Uranium remains one of the strongest contrarian plays in the energy and resource markets right now.

Spot prices of ~$18.00 per pound of U3O8 are the lowest they’ve been in 13 years. That’s below the cost of production for many uranium producers, which has taken much supply offline

At the same time, a massive wave of demand is coming. China is building 60 nuclear reactors that will be seeking fuel around the same time.

According to Cameco (NYSE: CCJ) — the world’s largest publicly-traded producer — there are 500 million pounds of uranium that will need to be purchased in the next 10 years.

Utilities in North America and Europe will have to hit the market as well. They’ve been complacent at these low prices but when they come to the market over the next few years they’ll likely have to bend to the terms of producers — which means higher prices.

After all, low prices beget higher prices. Shuddered projects are the precise reason uranium prices have to rise: the supply won’t be there when the utilities and Chinese come calling. And remember, the cost of uranium fuel to run a reactor is a minuscule portion of a reactor’s overall costs — so utilities care little if uranium is $40 or $80 per pound.

Cantor Fitzgerald, among many other institutions, are calling for supply deficits and resultant higher prices.

To continue reading please click link http://www.outsiderclub.com/pent-uranium-bull-will-rage-even-harder/2154