The much promised recovery in uranium price is nowhere in sight
Cameco hit with downgrade as hopes for uranium rebound fade
http://www.theglobeandmail.com/globe-investor/markets/market-blog/cameco-downgraded-amid-relentless-decline-in-uranium-price/article4570023/ DARCY KEITH The Globe and Mail, Sep. 26 2012, The rebound in the uranium market some speculated would surely follow the big-time drubbing the sector experienced in the aftermath of the Japanese Fukushima nuclear disaster isn’t exactly materializing.
In fact, spot uranium pries are now at the lowest level since
September, 2010, according to the price-tracking service Ux
Consulting. That’s well before the March, 2011, tsunami in Japan that
prompted a global rethink of nuclear energy and ushered in a crisis of
confidence in the uranium industry. TD Securities has taken note, and
today downgraded Cameco Corp. to a “hold” from a “buy.” Analyst Greg
Barnes also slashed his price target on the stock by $6 to $24.
Cameco shares have responded, falling nearly 5 per cent.
“The next 12 months are likely to be a continuation of the moribund
market that has dogged uranium for the past 18 months,” he concluded.
“While we believe that, over the long term, nuclear power should
remain an integral part of the world’s electricity generating capacity
and that nuclear capacity should continue to expand modestly (driven
by reactor additions in Asia), the medium-term outlook is unclear,
with the timing of Japanese reactor restarts in question and the
government announcing its decision to phase out nuclear power by the
2030s,” Mr. Barnes said in a research note.
It’s looking increasingly unlikely, he added, that any additional
Japanese reactors could resume operation over the next six to nine
months. There had been expectations that six to seven reactors could
be brought back online before the end of 2012.
“We expect this to have a dampening effect on market expectations for
spot uranium prices until there is more clarity on when restarts could
resume,” he said.
The continued weakness in both spot and term uranium prices resulted in TD pulling back its price forecasts for the commodity for the next several years. It now expects an average price of $51 (U.S.) per pound
in 2012, instead of $54; $55 in 2013, down from an earlier forecast of
$68; and $65 and in 2014, down from $75.
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