Commodities | Sep 28 2010
By Rudi Filapek-Vandyck
The spot uranium market is currently battling opposing forces and it would seem downward pressure on the spot price is attracting more buyers' interest.
Market rumours say leading producer Cameco has become increasingly busy in the spot market of late. Cameco management has indicated earlier it would actively buy uranium on the spot market to support the price of its main product (the moves have officially been sold as an investment into the future potential of the uranium market).
On the other hand, it would seem commodities intermediary Traxys has become more active of late as well. For readers interested in finding out more about Traxys' presence in the spot uranium market, here's a press release from 2007, outlining the company's intentions in the uranium market: http://www.traxys.com/News/Traxys%20Uranium%20Press%20Release%201.pdf
Alleged increased activity by both Cameco and Traxys proved insufficient to prevent the weekly spot price from falling during the week ending on Friday. Industry consultant TradeTech reports that as the week progressed prices kept falling, which led to increasing volume as buyers re-entered the market.
At the end of the week (Friday) TradeTech was nevertheless forced to cut its weekly spot price indicator to US$46.50 from US$48.00 the week prior. Industry contacts suggest prices by the end of the week were below TradeTech's revised price benchmark, more likely below US$46/lb.
TradeTech reports two aggressive buyers, one producer and one trader (Cameco and Traxys?), are now seeking deals up to volumes of 500,000 pounds in U3O8 equivalent each.
Alas, so far the increased buyers' interest has not been able to offset the downward pressure stemming from another intended sale by the US Department of Energy (DOE). As observed by TradeTech, lower prices have triggered a lot more interest and this should bode well for U3O8 spot prices post the DOE product placement.
TradeTech has left its medium term price benchmark unchanged at US$50/lb and the longer term price indicator at US$60/lb.
