Commodities | Apr 24 2012
By Greg Peel
The market for spot uranium seems destined to reach some sort of meeting of the minds which could result in more solid volumes, but not just yet.
As noted in last week's Uranium Buyers Shun Spot For Term, traded volumes in the uranium spot market have remained very subdued year to date compared to last year's Fukushima-impacted action. Yet this does not imply a total lack of interest in uranium, just a preference from buyers for delivery contracts of a year or more. Indeed, while few term transactions have been completed recently there is no lack of utilities on the hunt for delivery contract offers.
What we haven't seen much of this year is interest from hedge funds looking to speculate on uranium price direction via spot trades. On the one hand, speculators have had a rough time both in 2007 and again last year so understandably they remain a little shy, while on the other hand they are being turned off by the recent geographical (US vs European delivery) and uranium form (U3O8 vs UF6) mismatch in place across the Atlantic.
There were nevertheless four transactions totalling under 500,000lbs U3O8 equivalent conducted in the spot market last week according to industry consultant TradeTech, and some build-up in buying interest has meant TradeTech's weekly spot price indicator has risen US25c to US$51.50/lb. More transactions would have been completed if the sellers had not backed off, citing growing demand in the term market as indication spot prices should soon be higher.
“The entry of new demand in the mid and long term markets has many sellers convinced of the potential for additional spot demand to materialize,” suggests TradeTech, “and thus for a potential recovery in the spot price as well”.
Uranium fans can but hope.
TradeTech's term price indicators remain at US$53.50/lb (mid) and $60.00/lb (long).
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