Uranium Commodities Trading

Anyone looking for large profits and not afraid of high risk should consider trading in uranium. Highly volatile, during the past couple of years, prices have peaked at $45, then fallen to $29. During the past two years though, prices for uranium have trended up and this looks set to continue.

As an energy source, uranium has many advantages over traditional sources such as oil. Fuel produced from uranium lasts for decades and can be recycled for decades more (in the form of plutonium). This generates a constant political situation (having a substance which is hard to dispose of always creates interest), which in turn generates interest, helping to increase the likelihood of profit.

In contrast to oil and chemical refineries, the safety record for nuclear power far exceeds that of other sources. Other types of refineries have exploded due to incompetence and accident. Unlike other fuels, controls on the use of nuclear fuel are much more strict, and strictly adhered to.

Many consider uranium to be evil, or at least dangerous, but nuclear power safely generates 16% of the world's electricity. Japan and France have both heavily relied on nuclear power for decades, and neither country regrets the decision to use it as a major source of power. A massive 78% of France’s electricity is generated from nuclear power and there has never been a serious incident.

Power plants around the word are increasing, particularly in Asia. An $8 billion contract will soon be issued by China to build four new plants, on the way to constructing 27 by 2020. India also has plans to build 17 new plants by 2012, tripling existing capacity. In Russia, they have reduced exports to retain fuel for the 25 new plants planned there by 2020.

Long-term supply is not secured for most of the new plants, indicating they will have to pay market prices as they near completion.

A change in U.S. thinking may even be taking place in the near future. As concerns about global warming continue to rise, many environmentalists are beginning to see that nuclear power offers one of the best alternatives to continued fossil fuel use. And helping to tip the scale in favour of nuclear power is likely to be escalating oil prices.

Amidst these political changes, demand is rising while supplies remain tight. Commercial stockpiles fell 50% from 1985 to 2003, and mining remains expensive and difficult.

An Australian mining company, Cameco, is currently one of the world's largest uranium suppliers and plans to expand production 18% in Canada's MacArthur River mine, currently the world's largest.

Despite this, supplies are unlikely to expand enough to meet the growing demand to an extent that would suppress the price. Predictions by several analysts have supplies remaining tight over the next 10 years. As a result, prices are rising to levels not seen since their peaks in the 1970s and are expected to remain high for quite a while.

Currently, annual demand is in the vicinity of 170 million pounds, while annual supply is around 75 million pounds a year. Supplies stockpiled from the 1970s, the dismantling of Russian nuclear warheads, and other sources currently make up the deficit, but that supply is dwindling.

Though a relatively small cost, fuel for power plants is vital to their operation. There is no substitute so they can’t afford to run out.

After looking at the facts, traders interested in metals should definitely consider uranium. Contracts for uranium are made privately, and not traded on the open market, like other metals. However, the aspects of trading remain the same, and investors can buy mining stocks, futures contracts, options, etc as they can with any other investments. Speak to your broker for further information.

         

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