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Positive Forward Fundamentals Temper Long-term Uranium Outlook

Positive Forward Fundamentals Temper Long-term Uranium Outlook

The long-term outlook for the uranium market remains positive as industry insiders look forward to strong demand expected to come from the numerous reactors under construction worldwide — Russia, China and India have a total of 95 reactors planned over the next two decades. However, the short-term outlook is dreary as most utilities are well-supplied.

The uranium spot price continued to slide this week. Both TradeTech and Ux Consulting are reporting a spot price of $43.50 U308 per pound, down $2.25/lb from the previous week — the biggest week-over-week slump in prices since April 2011. Industry analysts attribute the steep drop to sellers' willingness to offload their product at cheaper prices as the year comes to a close.

In other market news, uranium-rich Australia is strengthening its trade alliance with energy-hungry India after overturning a a ban on uranium exports to the Southeast Asian nation last December. In an effort to combat the power shortages harming the nation's industrial production capacity, India plans to build more nuclear power plants with a goal of generating 8 percent of its energy needs from nuclear power by 2030. Currently, nuclear energy accounts for 2.3 percent of the electricity produced in India.

Company news

Uranium giant AREVA (EPA:AREVA) placed the nearly-complete, $1 billion Trekkopje uranium mine in Namibia on care and maintenance due to unfavorable market conditions. The France-based company said the project is only economically viable if it can sell U308 at $75/lb. The mine was expected to have an annual production capacity of 3,000 tonnes of U308.

"AREVA was engaged in an intensive programme to find innovative solutions for the launch of the mine,” stated the company. "Nevertheless, considering both the continued decrease of uranium prices coupled with the investments yet to be made on site, AREVA has no other option than to postpone the launch of the Trekkopje mine."

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