Uranium

From IntFX

Contents 1 Introduction 2 Uranium price chart 3 General uses 4 Pricing structure 5 Current consumption trends 6 Price forecasts 7 Major producers 8 External References

[edit] Introduction

When refined, uranium is a silvery white, weakly radioactive metal, which is slightly softer than steel, strongly electropositive and a poor electrical conductor. Uranium metal has very high density, being approximately 70% more dense than lead, but slightly less dense than gold.

Uranium metal reacts with nearly all nonmetallic elements and their compounds, with reactivity increasing with temperature. Hydrochloric and nitric acids dissolve uranium, but nonoxidizing acids attack the element very slowly. When finely divided, it can react with cold water; in air, uranium metal becomes coated with a dark layer of uranium oxide. Uranium in ores is extracted chemically and converted into uranium dioxide or other chemical forms usable in industry.

[edit] Uranium price chart

[edit] General uses

Uranium metal and its compounds are used mostly as fuel for nuclear reactors. The neutral isotopes mixture and the low-enriched uranium are used in power plants with stationary reactors. Highly enriched uranium is utilized in fast neutron reactor. Uranium-235 is the main energy source in nuclear weapons; Uranium-238 is applied in plutonium manufacturing.Uranium metal and its compounds are used mostly as fuel for nuclear reactors. The neutral isotopes mixture and the low-enriched uranium are used in power plants with stationary reactors. Highly enriched uranium is utilized in fast neutron reactor. Uranium-235 is the main energy source in nuclear weapons; Uranium-238 is applied in plutonium manufacturing. ^[1]

[edit] Pricing structure

In the uranium market, very high prices in the late 1970s gave way to very low prices in the early 1990s, the spot prices being below the cost of production for most mines. In 1996 spot prices recovered to the point where most mines could produce profitably, though they then declined again and only started to recover strongly late in 2003.

"Spot prices" apply to marginal trading from day to day and usually represent less than 20% of supply. Most trade is 3-7 year term contracts with producers selling direct to utilities, but with the price often related to the spot price.

The reasons for fluctuation in mineral prices relate to demand, and perceptions of scarcity. The price cannot indefinitely stay below the cost of production, nor will it remain at very high levels for longer than it takes for new producers to enter the market and anxiety about supply to subside.^[2]

[edit] Current consumption trends

About 435 reactors with combined capacity of some 370 GWe, require 78,500 tonnes of uranium oxide concentrate containing 66,500 tonnes of uranium from mines (or the equivalent from stockpiles or secondary sources) each year. The capacity is growing slowly, and at the same time the reactors are being run more productively, with higher capacity factors, and reactor power levels. However, these factors increasing fuel demand are offset by a trend for increased efficiencies, so demand is dampened - over the 20 years from 1970 there was a 25% reduction in uranium demand per kWh output in Europe due to such improvements, which continue.

Each GWe of increased capacity will require about 195 tU/yr of extra mine production routinely, and three times this for the first fuel load.

Fuel burnup is measured in MW days per tonne U, and many utilities are increasing the initial enrichment of their fuel (eg from 3.3 to more than 4.0% U-235) and then burning it longer or harder to leave only 0.5% U-235 in it.^[3]

• BRIC demand: Already in some parts of Asia, nuclear power forms a large part of total electricity generation. Currently South Korea and Japan generate 45% and 30% respectively of electricity through nuclear power using roughly 18% of world uranium production. However in China, nuclear power produces just 1.4% of electricity generation, and only 4% in India. Historically China has generated the vast majority of electricity through its enormous coal reserves, however recently China has now become a net importer of coal for the first time. We believe there is potential for China and India to massively increase electricity generation through nuclear power. In a similar scenario to base metals, we believe the BRIC economies will drive a significant increase in nuclear power.

[edit] Price forecasts

Uranium spot prices are forecast to climb this year on stronger demand, but rising supplies are expected to cap the market in 2009, a Reuters survey showed. A survey of 16 analysts conducted over the last month produced an average mid-range price for spot uranium UX-U3O8-SPT of $106.90 per pound in 2008 and $91.90 in 2009. The average weekly price in 2007 was $98.55 a pound, according to leading price publisher Ux Consulting.^[4]

• UBS: With uranium prices tracking back to US$75 per pound, UBS revised downward its uranium price forecasts for 2008 from US$95 to US$88 and for 2009 from US$150 to US$100. It's not until 2010 that UBS predicts investors will begin realizing the benefits of uranium's strong long-term fundamentals as prices hit US$110, up from UBS previous estimate of US$50 for that year.^[5]

• JP Morgan has forecasted an average weekly price of $90 in 2008, $85 in 2009, $80 in 2010 and $75 in 2011.^[6]

• 'ABARE': Spot uranium prices are forecast to decline by 15 per cent in 2008 to average around US$85 a pound as demand moderates and new mine capacity is commissioned.^[7]

• BMO Capital predicts uranium price at $115 per pound in 2008.^[8]

• Cameco sees uranium to trade at $100 a pound in 2008.

• Deutsche Bank: A revision on a June quarter assessment was that the projected 2007 spot price would average lower at $US101.35/lb, would then average $US128.75/lb in 2008 and be about $US130/lb in 2009 before tapering to $US95/lb in 2010. A serious imbalance would remain between supply and demand until 2009 "at the very least," the latest report said. ^[9]

• Energy Resources International Inc. an electric power advisory group, is forecasting that the long-term uranium base price will decline to under $50 a pound U308 by around 2012 to 2014 and then increase to about $55/lb by 2020.^[10]

• Far East Capital: Near-term uranium price indicators appeared to bottom in the third quarter of 2007 at $US70 a pound and now suggested a move in the spot price to $US90 a pound by early 2008 and up to $US120 a pound by late 2008. The long-term contract price had remained stable at $US95 a pound. Primary drivers included increasing energy demand, global warming, competing energy price increases and security of energy supply.^[11]

• Raymond James is predicting a drop in uranium prices, after revising its near term forecast on the radioactive mineral from US$153 per pound to US$75 per pound in 2008. The research firm also reduced its 2009 forecast from US$125 per pound to US$80 per pound, but left unchanged its medium and long-term price predictions. It continues to forsee US$80 per pound, US$65 per pound and US$50 per pound in 2010. 2011 and the long term, respectively. "Our view is that, barring significant disruptions, mine supply will rise moderately and contribute to a net surplus of uranium from 2010 to 2013," the analyst said. ^[12]

[edit] Major producers

It can be seen that Australia has a substantial part (about 24 percent) of the world's uranium, Kazakhstan 17 percent, and Canada 9 percent. In the low-cost category, Australia has a much higher proportion.

Current usage is about 66,500 tU/yr. Thus the world's present measured resources of uranium (4.7 Mt) in the cost category somewhat above present spot prices and used only in conventional reactors, are enough to last for some 70 years. This represents a higher level of assured resources than is normal for most minerals. Further exploration and higher prices will certainly, on the basis of present geological knowledge, yield further resources as present ones are used up. ^[13]

[edit] External References

1. ↑ http://u-uranium.info/application.html
2. ↑ http://www.uic.com.au/nip36.htm Uranium Markets
3. ↑ http://www.uic.com.au/nip36.htm Uranium Markets
4. ↑ http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL2193050120080122 Strong demand to boost spot uranium price in 2008
5. ↑ http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/02/06/cameco-uranium-one-estimates-cut-on-uranium-price-revision.aspx
6. ↑ http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL2193050120080122?pageNumber=3&virtualBrandChannel=0
7. ↑ http://www.allfactors.com/trading/abare-sees-uranium-prices-at-%2485-per-pound-in-2008
8. ↑ http://www.allfactors.com/trading/bmo-capital-predicts-uranium-price-at-%24115-per-pound-in-2008
9. ↑ http://www.allfactors.com/trading/deutsche-bank-forecasts-uranium-price-at-%24129-in-2008%2C-%24130-in-2009-and-%2495-in-2010
10. ↑ http://www.allfactors.com/trading/energy-resources-international-inc-sees-uranium-lower-%2450-level-in-2012-2014%2C-%2455-by-2020
11. ↑ http://www.allfactors.com/trading/far-east-capital-predicts-uranium-price-at-%2490-lb-in-h1-2008-and-%24120-by-the-end-2008.
12. ↑ http://www.allfactors.com/trading/raymond-james-forecasts-uranium-price-at-us%2475-per-pound-in-2008%2C-%2480-in-2009-2010%2C-%2465-in-2011
13. ↑ http://www.uic.com.au/nip75.htm Supply of Uranium by Uranium Information Centre