Uranium stocks follow spot price higher
The uranium market had a lot going for it at the start of 2014, including the prospects of a Japanese nuclear reactor restart that now, at least partially seems to be close.
The end of the Russia-US megatons to megawatts program last August, eliminating a huge source of supply was also supposed to support the market that had been in a long-term decline since hitting all-time highs of $135 in 2007 and was devastated after the Fukushima disaster in 2011.
China's plans to approve six to eight plants a year through 2020 – part of its war on pollution – is still being worked at but so far the uranium price has shrugged all good indicators sliding to $28 a pound earlier this year, levels last seen in 2005.
Haywood Securities in a new research note reports that the turnaround in the spot U3O8 price is gaining momentum, jumping 3.3% to $31 a pound this week and up nearly 8% in August.
The broker's average price tracked by the Vancouver-based independent investment dealer with $5 billion under management has enjoyed 13 session gains out of the last 15, adding more than 10% in August to $31.63.
The long term price, where most uranium business is conducted, is still languishing at $44 a pound, a six year low, but the differential to spot has narrowed 35% over the past year, which at some point should help drag the long term price higher.
Haywood forecasts a spot uranium price of $39.50 and a long term price of $57.50 next year and further improvement in prices to more than $70 within five years.
After an early 2014 run-up uranium stocks entered a sharp correction in March, but many shares in the sector is now playing catch-up with the improving spot price.
Near-term producers tracked by Haywood are up almost 25% so far this quarter, while explorers have enjoyed a 15% bounce since the beginning of July.