Uranium May Reach $200 in Two Years

(Bloomberg) — Uranium spot prices may reach $200 a pound within the next two years, buoyed by a shortfall in supply and increasing investment in the nuclear fuel by speculators, said Macquarie Bank Ltd., Australia’s biggest securities firm.

The price, which reached $125 a pound in mid-May, will probably average $125 a pound this year, rising to $135 next year, Macquarie said in a June 1 report. RBC Capital Markets, UBS AG and producers Rio Tinto Group and SXR Uranium One Inc. are among those also forecasting further gains.


Uranium prices have jumped 12-fold since early 2003, underpinned by a shortage, concerns over future production and a lack of investment in new mines, Macquarie said. Efforts to limit emissions of carbon dioxide from burning fossil fuels have bolstered demand for uranium for power generation.

“In the near term, with the market expected to remain in significant deficit in 2007-08, risk on the supply side and growing speculative interest, it is hard to see what could prevent spot prices going higher,” Macquarie analysts Max Layton and John Moorhead said. “We would not be surprised to see prices move up to around $200 a pound over the next two years.”

Bloomberg