Commodities | Nov 03 2015
By Greg Peel
US uranium production dropped to 774,541lbs in the September quarter, down 2% from the June quarter and down 47% from the September quarter 2014. It was the lowest quarter of production since December 2005. Lower prices are blamed for the production cutback.
It has thus been a tough nine months of 2015 for Canada’s major global uranium producer Cameco, which reported C$75m in uranium profits to September, down from C$133m in the same period last year.
Prior to last week, several sellers had been sweating on feedback with regard outstanding supply offers to utilities and those who learned they’d been unsuccessful chose to hit the spot market instead. A total of seven transactions totalling 800,000lbs of U3O8 equivalent changed hands last week, industry consultant TradeTech reports, as sellers dropped their offer prices in order to attract buying interest.
TradeTech’s weekly spot price indicator fell by as much as US$1.25 as the week progressed, but buying interest did emerge from traders and intermediaries, and by week’s end the price had settled at US$35.75/lb, down US75c for the week.
October is often a volatile month for uranium prices and it has again proven the case in 2015.
More than 5mlbs of U3O8 equivalent was traded over October compared to 3mlbs in September, TradeTech reports. Early in the month a sharp rebound took the spot price to as high as US$38.50/lb and provided hope that perhaps, finally, global production cutbacks were beginning to have an impact. But alas, the rebound proved fleeting.
Ultimately October closed at US$35.75/lb, down from US$36.25/lb at end-September.
Fourteen transactions were concluded in the terms markets during October for a total of 9.3mlbs, TradeTech notes. More than one half of the volume represented buying from utilities. Earlier in 2015 a sizeable gap had opened up between the weekly spot price and mid- and long-term prices which discouraged end-users from entering the market. That gap has more recently tightened, and TradeTech notes there remains interest from utilities in term delivery contracts as the year winds down.
TradeTech has reduced its mid-term price indicator by US75c to US$38.75/lb, while its long term indicator remains unchanged at US$44.00/lb.
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