Bullish on Uranium

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It’s nearly impossible to talk about the slumping uranium industry without mentioning the Fukushima disaster of 2011 and the spot price remains the lowest it’s been in over a decade. 
As of October 3, the uranium price is sitting at $22.50 per pound–a loss of 34.3 percent year-to-date–as low demand and oversupply remain contributing factors to the subdued uranium price.
But, all hope isn’t lost for the uranium industry, which has also been said time-and-time again, as investors and analysts project the price to pick back up sooner rather than later.
One of those is Mercenary Geologist Mickey Fulp who, in September 2015, wrote that he remains a uranium bull. In the post, Fulp writes that he’s still bullish because “the mid-to-long-term supply and demand fundamentals are compelling.”
The Investing News Network (INN) reached out to Fulp to find out if that’s still the case.
“Uranium’s had a very bad year despite other commodities having a relatively good 2016,” Fulp said in the interview, adding his reasons for being a uranium bull is built on a mid and long-term future of the industry, and not on the short-term prices.
Although the demand for uranium has been low post-Fukushima, it is expected to grow.
For starters, FocusEconomics‘ Consensus Forecast Commodities October 2016 report indicates a pickup in demand from China and Europe. In particular, the report says a $24 billion power station at Hinkley Point in the UK, which is the biggest energy project in Europe, is expected to “boost confidence in the market and push up uranium prices.”
Secondly, the World Nuclear Association (WNA) notes that there are currently over 440 commercial nuclear power reactors operating in 31 countries, with 60 more reactors under construction.
Fulp said the new reactors being built will drive the industry in the future, but as of right now there is not enough uranium being produced–either with primary supplies or secondary supplies–to keep up with anticipated demand in the mid and long term.
“There is a current oversupply largely driven by the fact that Fukushima took 50 plus reactors out of commission and Japan,” he continued. “That has really destroyed the short term demand of uranium,” adding that the spot price and contract price have been reflected by that.
Still, just because the uranium price is at an all-time low, that doesn’t mean it isn’t a good time to buy into it.  In fact, Fulp said that now “absolutely” is a good time for investors to look into the uranium sector, but noted that he is a contrarian.
“I take longer term views and try to buy things when they’re unknown, unwanted, unloved and undervalued,” he said.
Looking ahead, panelists in FocusEconomics’ latest report expect the prices to average $30.90 per pound in the fourth quarter of 2016 and picking up steam in 2017 to an average of $37.60. While that’s a long way to go from its current price, investors will surely be interested in keeping a watchful eye on what will happen in the uranium sector.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.