Commodities | Sep 23 2008
By Andrew Nelson
Industry consultant TradeTech notes that uranium prices do not normally follow indicators of general commodities, or market prices because the underlying demand for uranium is generated by nuclear power plants, which are not that sensitive to general economic activity. However, the last week shows us that the uranium market, while not generally correlated to other markets, is still not entirely immune.
After months of holding firm, last week’s decline in the uranium spot price has been followed with another decline this week. Four transactions in the spot uranium market this week sees the consultant’s weekly spot price indicator down US$3.00 to $60.00 per pound.
TradeTech advises broader market pressure this week was a main contributor to price weakness, reporting that one distressed seller completed a sale for about 100 thousand pounds U3O8 (uranium oxide) at a price several dollars below published prices. The other three sales were concluded at higher prices, but the damage was already done, although TradeTech noted that new demand did emerge, with a non-US utility requesting offers for 450 thousand pounds U3O8.
Otherwise, the long-term uranium market was quiet this week, with TradeTech reporting no new demand or transactions.
With supply side problems continuing and high demand growth eventually expected from China, India, South Korea, and Japan, the long term price remains at US$80 per pound.
Fellow-consultant Ux Consulting lowered its own weekly spot price indicator to US$62/lb last week. FNArena is not yet aware of the results of UxC’s latest update.
