Spot Uranium Stays At US$75/lb

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By Rudi Filapek-Vandyck

It would seem that persistent calls by stockbrokers and market watchers that US$75/lb would once again prove to be the low point in yet another uranium spot price correction have been correct with the weekly spot price for the most popular form of yellowcake, U3O8, remaining at US$75/lb for the second week in a row after industry consultant TradeTech cut its price indicator to this price level in the first week of February.

TradeTech confirmed it has left its weekly spot price indicator unchanged for the second week in a row. Fellow consultant Ux Consulting did the same thing last week (only not for the second week in a row as it took UxC one week longer to get to this price level).

TradeTech believes no transactions have been concluded in the spot market over the past week, amidst rumours that a large order had been done at a price level significantly below the weekly spot price. However, reports the consultant, these rumours were later followed by unconfirmed speculation that a large deal had been done at a price significantly above the weekly spot price. Suffice to say, the sector is still very much dominated by a lot of hearsay and what-ifs, but not so much by real facts and figures. TradeTech also believes no new potential buyers entered the market last week.

There are a few public offers due this week, which could lead to a potential price recovery by Friday. Such a scenario would fall in line with what happened in the second half of last year and would once again confirm that US$75/lb is about as low as spot uranium could possibly fall -major disasters not included- in the medium term.

Amidst all the industry fuzz about an over-ambitious Kazakhstan threatening to spoil the party for producers elsewhere, TradeTech’s latest update contains one interesting observation about uranium production in the US. Citing figures from the US Energy Information Administration’s (EIA) Domestic Uranium Production Report, TradeTech highlights US’ 2007 production increased by 14% compared with 2006 and was the highest cumulative production in eight years.

Rio Tinto ((RIO)) management recently announced it aims at a doubling of its current uranium production by 2015. This goal includes production increases for 67% owned Energy Resources of Australia ((ERA)).

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