Commodities | Apr 14 2009
By Rudi Filapek-Vandyck
Investors and industry participants have been doing their best to see the positives in recent U3O8 spot market events and developments, though the price for spot deals has relentlessly continued its downward path in April. Last week, industry consultant Ux Consulting lowered its weekly spot price benchmark to US$40/lb – a level widely regarded as the probable bottom for the medium term.
UxC’s move has been followed suit by peer TradeTech but the latter decided to only go as far as US$40.50. This is feeding hope the spot uranium market may indeed have found a bottom.
It is FNArena’s observation that uranium is widely cited as one of the least risky options around for investors seeking exposure to commodity producers through equity markets.
TradeTech’s latest industry report confirms nothing has changed dramatically from observations made in the preceding weeks: hopes are most of the supply-overhang has now been removed from the spot market, deals are still taking place and sellers are reluctant to agree to any further price discounts at these low price levels. Any buying interest remains discretionary, but overall activity has undeniably picked up.
TradeTech is sufficiently confident to predict buyers will continue to purchase material in the weeks ahead. The week past saw two deals concluded for a combined total of around 350,000 pounds U3O8 equivalent.
The consultant’s long term price benchmark has remained unchanged at US$69/lb. The revised weekly spot price indicator implies a decline by US$0.75 from the consultant’s prior published price benchmark.
