The Stealth Uranium Rally

While the uranium spot price has continued to drift lower ($18/lb at last check), we have witnessed a broad upturn in the uranium exploration and production sector:

Uranium Spot 

spot_uranium

URA (Daily)

ura_daily_6_month

This week’s advance has been particularly striking with many uranium equities rallying more than 10% while seemingly nothing has changed fundamentally with the long term uranium story. However, perhaps that’s just it; nothing has changed and the long term story of an impending uranium supply shortfall is finally beginning to gain traction among investors.

Goviex CEO Daniel Major’s tour de force piece on the looming uranium supply shock pointed to 2020 as the major inflection year after which existing inventories will have largely been depleted and uranium demand will take off largely driven by new reactors in China coming online:

 

uranium_demand_chart

Meanwhile 2017 could be the year that utilities begin to come back to suppliers such as Cameco to draw up longer term supply deals to meet some of their uncovered demand beyond 2020. Perhaps this is what the market has begun to get in front of and it will be very interesting to see at what long term prices the first deals are done ($40/lb is a number that has been thrown around a lot).

 

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