Monday, September 19, 2005

Uranium Prices to Keep Rising Says Australia's Abare

Uranium Prices to Keep Rising Says Australia's Abare

Monday September 19, 11:03 AM
Uranium Prices to Keep Rising Says Australia's Abare
MELBOURNE (Dow Jones)--Uranium prices will likely gain 11% next year as reactor stockpiles dwindle and miners such as BHP Billiton (BHP) can't keep up with demand, Australia's chief commodities forecaster said Monday.

Prices of the nuclear fuel are expected to average US$30.10 a pound in 2006, from $US27.10 a pound this year, the Australian Bureau of Agricultural and Resource Economics said in its quarterly bulletin. That compares with a spot price of US$30.75 a pound Sept. 12.


Uranium prices have more than trebled since early 2003 as less of the radioactive metal from disarmed nuclear weapons makes its way to utilities' stockpiles. Demand has increased as China, India and Russia build more reactors and uranium investment funds have started buying the fuel.

Prices "are forecast to rise in the short term, with the underlying deficit between uranium supply (mine production and secondary sources) and consumption leading to a decline in stocks," Abare said.

Mine production will be just 60% of world demand this year, Abare said in the report. Production is expected to increase 2% to 49,800 tons in 2006 and consumption is expected to gain 1.4% to 81,800 tons.

The recent price gain means a small rise in production should translate into big earnings for Australian uranium miners. While mine output is expected to gain just 4.3% to 11,434 tons next year as BHP ramps up production at its Olympic Dam mine, export earnings are expected to rise 30% to A$616 million from A$475 million this year, Abare said.

Average contract prices received by Australian miners should rise to A$53.90 a kilogram in 2006 from A$42.20 a kilogram this year.


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