Introduced by Greg Peel

At the end of October uranium industry consultant TradeTech dropped its spot price indicator for U3O8 by US$5.50 to US$41.00/lb, its mid-term indicator by US$5.25 to US$45.00/lb and its long term indicator by US$2.00 to US$59.00/lb after the worst week for uranium prices since the Fukushima disaster. General belief among uranium analysts is that prices must eventually come under upside pressure given the global demand-supply balance, but a lack of interest from buyers appears to contradict this opinion. Hanging over the global uranium market's head, apart from anything else, is ongoing uncertainty with regard to Japan's nuclear future.

Ahead of the Herd's Rick MIlls has his own opinion and last week Melissa Pistilli of Uranium Investing News (uraniuminvestingnews.com) sat down with Rick to discuss uranium prices and the outlook for U3O8 producers. Melissa's interview follows herewith.


Uranium Investing News: Short-term uranium spot prices are trading nearly $20 a pound below long-term prices. Can you explain the huge disconnect?

Rick Mills:There's obviously a dark cloud still hanging over the uranium sector even though it's been nearly two years since Fukushima. The spot market has experienced nearly a 10 percent drop in the last few months, with most utilities sitting on the sidelines waiting to see if prices have bottomed. Limited demand has been forcing sellers into lowering prices to entice utilities into buying.

Japan's post-Fukushima nuclear fuel inventories are a huge overhang on the spot markets. As a utility, if you think Japan and Germany are not going to restart their reactors you're sitting on the sidelines waiting for all that fuel to come into the market and further depress prices ? of course, neither Japan nor Germany has been buying fuel for awhile, so we've lost that demand. There's also been limited Chinese demand due to its long-anticipated revised nuclear build schedule creating uncertainty. Are they cutting back, and if so, how much? All of that is on top of low natural