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Haffkin-Roth Releases The Commodity Outlook™ - Uranium

During the last few quarters, spot price of uranium has been trading in the range of US$51-53/lb and it might have found a floor at US$50/lb.

According to Haffkin-Roth, spot prices of uranium averaged S$51.34/lb in the second quarter of 2012. The average long-term price, increased by 1 percent - to US$61/lb - as against the first quarter of 2012.

In the last few quarters, after the introduction of new financial industry participants that are not uranium industry players, the spot market has become more active and has registered a marked increase in annual volumes and transaction numbers. However, in the last quarter, spot price declined due to weaker demand and thin trade volumes resulting from short-term market uncertainties. Additionally, during the same period, the long-term price (captures about 80-85 percent of the market contracts) improved, primarily because Ohi, a town in Japan, received approval to restart two nuclear reactors.

According to the average consensus estimates released by Haffkin-Roth, in 2013, spot prices are expected to decline slightly as a result of an expected surplus; this surplus is expected to result from a reduction in demand due to the closure of nuclear reactors in Japan and Germany. However, in the medium term, with the commissioning of new nuclear generation capacities, especially in China, Chinese Taipei, India, Korea and Russia, the uranium market is expected to be in deficit by 2014.

According to the Haffkin-Roth Research Department, more than 80 nuclear reactors are expected to be commissioned by 2017, of which 65 are under construction. According to the World Nuclear Association, 487 (as of 1 August 2012) new reactors are planned or proposed to be operational by 2030, which is five more than pre-Fukushima; this includes 171 in China, 57 in India, 41 in Russia and 30 in the US. Russia's highly enriched uranium (HEU) contract is also expected to end in 2013, leading to about 18 percent (24Mlb) reduction in secondary supply from the market.

Although spot prices have stagnated due to conditions in Japan and their after-effects, the long-term uranium prospects remain bullish; the average long-term consensus price estimate for 2013 is US$63/lb and it is expected to increase to US$80/lb by 2015.
According to the revised figures by Haffkin-Roth Research Department, the global uranium mine production increased slightly, by 1.7 percent, to reach 54.6kt U in 2011. However, the production is expected to increase by 12 percent before the end of 2012.

Haffkin-Roth is a pre-eminent provider of alternative investments. Our mission is to find the best alternative investment managers and bring them to our clients through alternative mutual funds, private funds, and futures managed accounts. Our suite of products is sold through the intermediary channel, including clearing houses, independent broker/dealers and registered investment advisors. We also have a robust Private Client Group that works directly with high net worth individuals and family of Haffkin-Roth. We pride ourselves on our people and are strongly committed to our company motto: Trusted Alternatives. Intelligent Investing.

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