Commodities | Nov 23 2010
By Greg Peel
The spot uranium market has awoken as if from a slumber this past month and ticked up each week with a couple of big jumps in the mix. The shift up towards the US$60/lb mark has had two effects, notes industry consultant TradeTech.
The first is that, sensing growing interest on the buy-side, patient sellers have been backing off in the hope of securing higher prices. The second is that the recent moves have seen speculative buyers falling away on the assumption the boat has sailed for now.
It was thus a relatively quiet week on the spot market last week with only 200,000 pounds of U3O8 changing hands. This represented two trades and the price was again higher on the week before, ticking up by US65c to US$59.90/lb.
The US$60 level is what might be called a “popular” price when looking at the “real” uranium market of long-term supply contracts. TradeTech has its medium-term price indicator currently reading US$56/lb and its long-term US$62/lb. Last week's spot trading suggests US$60 is providing resistance, but then a breach may be significant.
This is backed up by the emergence of a buyer in the market looking for 200,000 pounds for 2011 delivery and the same again for 2012 but meeting with a “very limited response” according to the consultant.
Meanwhile, three transactions occurred in the term market last week with one US utility securing amounts of 500k pounds for five-year gradual delivery and others seeking larger amounts for delivery in 2012 through to longer dates.
