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To: LoneClone who wrote (13337)	1/22/2008 10:35:54 AM
From: LoneClone	Read Replies (1) \| Respond to of 193686

Strong demand to boost spot uranium price in 2008 Tue Jan 22, 2008 8:00am EST reuters.com By Anna Stablum LONDON, Jan 22 (Reuters) - 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. Analysts say prices will ease next year on rising supplies, mainly from Kazakhstan, but also from Canada and southern Africa. "Uranium is likely to stay relatively strong until new production comes on stream later in the year," analyst Charles Kernot at Seymour Pierce told Reuters. Uranium, a silvery white metallic element, was last week trading at $89.5 on the spot market, compared with $7 in 2000. "In the short term, we think that the downside for uranium spot prices from current levels is very limited," said analyst Max Layton at Macquarie Bank. A recent surge in prices was fuelled by global concerns about energy security and a worldwide hunt for alternatives to high carbon-emitting fossil fuels. Prices jumped to a record high of $136 in June, bolstered by tight market conditions and speculative buying. Increased activity by funds and speculative buying was seen helping drive prices to around $125 per pound by mid-year, said Gene Clark, executive officer at uranium consultancy TradeTech. "But waning interest in late 2008 and through 2009 is expected," he added. "SUPPLY-SIDE CONSTRAINTS" Financial players together with utilities would be the main price drivers in 2008, analysts said. Data in October from the World Nuclear Organisation showed 33 reactors under construction and 94 ordered. Producers are expected to continue to meet long-term contract commitments by purchasing spot metal due to supply disruptions. "Although the demand for nuclear generated power has the potential to dramatically increase amid the global clamour over greenhouse emissions, supply-side constraints represent the largest upside price risk," said Joel Crane at Deutsche Bank. Australian cyclones, water problems in Canada and a lack of sulphuric acid in Kazakhstan have put a lid on supply for now. But with producers determined to take advantage of high prices, more output is expected during the second half of 2008. "Production will start to ramp up near the end of 2008 and into 2009, so prices will start to come down by the end of this year and next year," economist Dina Cover at Toronto-Dominion Bank said. Additional supply is seen coming from Paladin's (PDN.AX: Quote, Profile, Research) Langer Heinrich mine, Uranium One's (UUU.TO: Quote, Profile, Research) Dominion Reefs mine and the existing Rossing under Rio Tinto (RIO.L: Quote, Profile, Research). Kazakh producer Kazatomprom has said a shortage of sulphuric acid will be resolved by May 2008 and Uranium One has also secured supplies of acid by investing in a Russian plant. "By 2009, increased world production from new sources and an easing of supply tightness due to resolution of production problems from existing producers will relieve the upward pressure on spot (cash) prices," TradeTech's Clark said. Longer term, the price is seen easing even more with JP Morgan forecasting an average weekly price of $90 in 2008, $85 in 2009, $80 in 2010 and $75 in 2011. (Details of spot uranium price forecasts can be accessed by clicking on COMMODITYPOLL25) (For story on base metals survey click on [ID:nL21421890]) (Additional reporting by Cameron French in Toronto and Carole Vaporean in New York) (Editing by Chris Johnson)