Uranium prices are up a good 10% over the last month, with the latest quote at US$23.50.
Stocks in uranium producers like Cameco (CCO.TO, C$15.53) are up in proportion. Uranium exploration stocks are up even more: Fission Uranium (FCU.TO) and Nexgen Energy (NXE.TO) have leapt over 18% from their May 31 closes.
Does this mean the next uranium bull is finally underway and it’s time to go long?
No.
Major producers like Cameco and producing countries like Kazakhstan have voluntarily cut production to reduce a supply glut that has kept prices down. This is exactly what OPEC + Russia have been doing in the oil market. And just like those voluntary actions, the cuts can be quickly reversed whenever those making them feel like it.
Until the uranium goes into an actual supply deficit, no price gains can be counted on to last. The price gains alone do not mean that time has come.
The most important factor here is secondary supply from Japan. This has been flooding the market at prices well below cost of production, ever since the Fukushima disaster shut down Japan’s nuclear plants. A few reactors have been restarted, but that’s been going slower than uranium bulls (myself included) expected. There is no evidence yet that the Japanese have stopped, or will stop selling cheap uranium anytime soon.
Until that changes, caveat emptor—buyer beware.
