Uranium (U3O8 : US$41.75), Net Change: 0.25, % Change: 0.60%
Why bother even producing any more! Canaccord Adams Senior Mining Analyst Eric Zaunscherb highlighted Tuesday that
uranium industry consultants have noted the relative absence of utility buyers in the spot market recently but expect the spot
price to trade in a narrow range near-term. This is a function of sellers unwilling to lower prices further but, more importantly,
the presence of producers willing to step into the market to cover commitments under longer-term contracts. As a number of
senior producers recently noted, the current spot price level is unsustainable in the context of future demand and the need for
new production. One must also wonder whether, in the context of a higher-cost producer, buying on the spot market in order to
meet contract commitments makes more economic sense than producing. This fact may also be exacerbated by U.S. dollar
weakness vis-à-vis producer currencies such as the Australian and Canadian dollars. Revenue is U.S.-dollar-denominated while
the bills are paid in local currencies thus squeezing margins further. So how low can spot uranium go? In Zaunscherb's opinion,
not much further