Commodities | Mar 22 2011
By Greg Peel
I updated the uranium spot price situation late last week in the wake of the nuclear reactor crisis which had seen uranium producer stocks taken to the cleaners. ("Uranium Update")
At that point the immediate response in consultant UxC's indicative price had been a 10% price fall to US$60/lb, but after a week of trading fellow consultant TradeTech has dropped its previous indicative price of US$66.75/lb to US$53.00/lb, a fall of 22% from the a week earlier and some 27% below the recent peak.
By mid last week spot uranium was changing hands at US$50, TradeTech notes, as desperate speculative holders bailed out in a hurry. In the first couple of days the buyers simply let them sweat with, one assumes, a good deal of schadenfreude. But US$50 had been a level touted by analysts as where real buying interest lay and sure enough, in came the buyers.
By week end, a sizeable total of 3.6m pounds of U3O8 equivalent had changed hands in 21 transactions, TradeTech reports, with the buy-side represented by utilities and uranium producers covering contract shortfalls, and the sell-side by hedge funds. TradeTech suggests the desperate sellers have now been cleaned out, as by week's end the buyers were still queuing up but supply had evaporated.
One might thus assume we have seen the earthquake-related low mark for spot uranium, assuming no further disaster at Fukushima. While the situation still seems fluid in Japan, experts have been playing down the true threat as totally over-hyped by an alarmist media (See "If It Bleeds, It Leads").
The impact is considered to be more fundamental than just one crippled power plant however, such that that the future of nuclear energy has been brought into question. Here it is the age of the Fukushima reactors that experts point to, and technological advances in the meantime, and the fact Fukushima is on the coast, on a fault line, which most reactors aren't.
