Commodities | Dec 02 2014
By Greg Peel
The only month more volatile for the spot uranium price than November past since prices began being tracked in 1996 was that of March, 2011 – the month in which a tsunami struck Japan and caused a nuclear accident at the Fukushima plant, leading to the immediate shutdown of all Japan’s reactors. The price surge from post-Fukushima lows which accelerated before peaking in November and falling back sharply was triggered by the announcement of approval for the first reactor restarts in Japan since the accident.
Several end-users entered the market in November, notes industry consultant TradeTech, in some cases due to end of year budgets but in other cases simply in an attempt to secure what possibly would prove the last of post-Fukushima “cheap” supply. The end-users found themselves battling it out with investors who returned to the market after a long hiatus in the belief a price rally was finally in swing. Despite the increase in volume witnessed in the month, spot uranium remains a thinly traded market hence when sellers initially backed off to make the most out of fresh demand, the spot price flew upward.
Until, that is, the sellers themselves were surprised by the strength of the rally, and subsequently barrelled in once more to force the price to quickly retreat. TradeTech’s spot price indicator hit a 26-month high of US$44.00/lb on November 14, only to be slapped back down to US$38.00/lb by November 21. Last week saw prices oscillate around the US$40 mark before ending the week, and the month, at US$39.00/lb, up US$1.00 from the week before and 25% over 16 weeks.
Volumes in November jumped to 5.7mlbs of U3O8 equivalent, up from 3.1mlbs in October. Traders, financial entities, producers and investors all acted as buyers in the month, TradeTech notes.
Five transactions were also included in the term uranium market last month, evoking TradeTech to once again lift its term price indicators. The consultant’s mid-term indicator has been lifted US$3.25 to US$42.00/lb and its long term indicator has been lifted US$5.00 to US$50.00/lb. Several utilities are currently evaluating mid and long term uranium purchases with several more expected to enter the market before year-end.
TradeTech notes nevertheless that producers, who in response to ever lower post-Fukushima spot prices had been forced to curtail production and shelve expansion plans, have been shying away from longer term delivery contracts at fixed prices. Having suffered long and hard, producers would like to get a bit back thank you very much.
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