Commodities | Aug 24 2007
By Rudi Filapek-Vandyck
Investors in uranium companies may draw renewed confidence from the latest update on the sector by Commodity & Energy strategists at BCA research who believe the sector should soon start enjoying higher share prices again.
BCA is of the view that multiple negative factors have conspired recently and pushed spot prices down, with similar impact on share prices of companies in the industry.
Interestingly, BCA is also of the view that recent market developments have pushed out the speculators from the sector and this should see prices for uranium -and of companies with leverage to the nuclear fuel- stabilise.
BCA suggests that sheer euphoria has quickly been replaced with overdone pessimism, and believes the about-face in sentiment has occurred without much change in the bullish medium-term story.
The strategists are of the view that the recent reduction in Japanese demand for nuclear power following the earthquake-related damage will soon be restored. They also are of the view that Chinese demand will far outpace supply in the next three years while further upside remains possible from demand coming from Russia and India.
All this should push prices higher again, BCA believes.