World’s Worst Commodity Radioactive for Investor Portfolios – by Joe Deaux, Natalie Obiko Pearson, and Klaus Wille (Bloomberg News – January 6, 2017)

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No major commodity had a worse 2016 than uranium. In fact, the element used to make nuclear fuel has had a pretty dismal decade. Prices tumbled 41 percent last year, touching a 12-year low below $18 a pound in November, according to Ux Consulting Co., which compiles market data.

The slump was the seventh in nine years. The rise of nuclear power has slowed as utilities shifted to cheaper natural gas for new generators. And after the 2011 Fukushima disaster, safety concerns led big uranium buyers including Japan and Germany to shut down or decommission reactors.

“It’s the world’s best asset in the world’s worst market,” said Leigh Curyer, chief executive officer of NexGen Energy Ltd., a Vancouver-based uranium producer. “I don’t think there’s a mine profitable at current spot prices. This short-term spot price isn’t reflective of the cost of producing a pound globally.”

The outlook isn’t entirely bleak. Losses are forcing uranium mines to cut production or close, which may eventually create a supply crunch, while accelerated building of nuclear plants in China and India could help revive demand. But it may take awhile for those developments to take hold, according to a report last month from Morgan Stanley, which said it can’t identify any medium- or long-term driver for prices.

Uranium extended its fade last year even as most other raw materials recovered. The Bloomberg Commodity Index of 22 items posted its first annual gain since 2010, advancing 11 percent. Natural gas futures rebounded from a 17-year low in March to gain 59 percent last year, while zinc, oil and sugar rose more than 20 percent.

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