Commodities | Dec 22 2015
By Greg Peel
It is a fact of life that if a market cannot find a reason to go up, it must ultimately go down. For six weeks the uranium spot market has seen a lack of any notable interest on the buy-side from utilities, which for the most part have found little reason to participate. Utilities have been active in the term delivery market but as the year winds down, they appear to be satisfied with their supply.
Nor has there been much evidence of producer activity in the spot market. Producers typically use the spot market to make-up shortfalls in contractual deliveries or occasionally sell unneeded material but they, too, have been quiet these past few weeks.
It has thus been left to the traders in the market – the intermediaries and speculators – to provide what little volume has changed hands these past several weeks. Last week it seems sellers became at bit anxious that the buy-side interest was unmoved and thus with year-end approaching, bit the bullet.
It mattered not that the historic Paris Agreement, signed last week, effectively endorses nuclear power as one alternative to fossil fuel energy. Nor that major producer Cameco suffered a rock fall that has for now suspended production at one of its mines. Last week was just about squaring up for 2015.
When the first seller blinked, the race was on. Eight transactions totalling 1mlbs U3O8 equivalent were concluded at successively lower prices as the week progressed, reports industry consultant TradeTech. By Friday the dust had settled and the spot uranium price had suffered its biggest weekly fall since April. TradeTech’s weekly spot price indicator is down US$2.50 at US$33.50/lb.
While utilities continue to submit tenders for delivery contracts, there were no transactions reported in the term markets last week. TradeTech’s term price indicators remain unchanged at US$38.50/lb and US$44.00/lb.
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