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Energy
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General Market Commentary
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General Energy
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General Market Commentary
Uranium to stay weak for now but a 'violent price increase' is coming: Cantor Fitzgerald
Cantor Fitzgerald forecasts $22.14 spot uranium price for 2017 due to Kazakh producers being slow to implement planned production cuts and more supply from Russia.
"While a 10% reduction was guided by the state-owned organization [Kazatomprom] that by law has an ownership stake in every uranium mine in the country, we suspect that some operators may have dragged their feet in implementing these curtailments," writes Cantor in a research note.
Cantor says that these prices are unsustainable and notes that some producers are buying from the spot market since to fulfill their deliveries since it is cheaper to buy in the market than to produce.
Adding to uranium's woes is secondary supply.
"We currently estimate secondary supplies of about 48M lbs of U3O8 with 22M lbs coming from Russian sources such as enrichment providers via underfeeding. Our conversations with several industry participants leads us to expect continued high levels coming from Russia for at least through 2018."
However, the research firm is optimistic over the long term.