Morgan Stanley - URANIUM To Advance 19%

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    Uranium Prices Will Advance 19% Next Year, Morgan Stanley Says

    Oct. 21 (Bloomberg) -- Uranium prices will average $52.25 a pound next year, 19 percent higher than this year, as new supplies are expected to lag behind an increase in demand for the nuclear fuel, Morgan Stanley said in a report.

    This year through mid-October, uranium oxide concentrate for immediate delivery averaged $43.78 a pound (0.45 kilogram), and in 2012 prices are forecast to rise to $60, Morgan Stanley analysts Peter Richardson and Joel Crane said in a report today.

    Spot uranium was at $49.25 a pound in the week through Oct. 18, according to Roswell, Georgia-based Ux Consulting Co. A nearly balanced uranium market make prices vulnerable to supply shocks and/or new build announcements, Richardson and Crane wrote.

    This years average is 6 percent below last years level and almost 30 percent lower than the average in 2008, according to the report. The steady, two-year erosion in uranium prices has translated into difficult mining breakeven points, particularly for new uranium projects, the analysts said.

    Lower uranium prices made supply growth increasingly dependent on production from Kazakhstan, the analysts wrote. Kazakhstan produced 14,020 metric tons of uranium last year, surpassing Canada as the worlds largest producer, according to data from the World Nuclear Association.

    Demand for fuel was expected to rise by 24 percent through 2015 as new nuclear plant capacity is rapidly coming online and the planned project pipeline is briskly increasing, according to the report.

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