World's worst commodity is radioactive for investor portfolios

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 per cent last year, touching a 12-year low below US$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 is not 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 that it cannot identify any medium or long-term driver for prices.