Commodities | Aug 19 2008
By Rudi Filapek-Vandyck
Things move rapidly in the spot market for uranium oxide (U3O8). Only a few weeks ago overall market activity proved to be many times above normal transaction volumes, but things have cooled down rapidly since. The week past saw no deals being concluded, not in the spot market, and not in the longer term contract market.
In essence, this means that it has taken only two weeks to move from frantic enthusiasm to a virtual standstill. Could the savage sell-down of commodities elsewhere have anything to do with it?
For the record: industry consultant TradeTech has left its weekly spot price indicator unchanged at US$64.50/lb and its longer term benchmark at US$80/lb.
Mind you, all this happened with industry giant Cameco admitting ongoing problems at its flagship Cigar Lake project. Those who have been following the industry closely will no doubt remember initial flooding of Cigar lake in the third quarter of 2006 that triggered the market bubble that eventually burst in June 2007. This time around, however, investors have other things on their mind, other than trying to repeat the exercise from back then.
TradeTech does report that the apparent market gap between asking prices by sellers and what buyers are willing to agree to has widened on the back of the Cameco admission.
Fellow industry consultant Ux Consulting also left its spot and longer term price indicators unchanged at the same price levels as those maintained by TradeTech. Given the non-activity in the sector at present, this week’s update by UxC is unlikely to bring any changes.
