Commodities | Jan 17 2012
By Greg Peel
Industry consultant TradeTech closed out its spot uranium price indicator for 2011 at US$52.00/lb. This was down from US$62 at the end of 2010. Spot trading activity in 2010 totalled 42.8mlbs and marked the highest level in 20 years. Activity in 2011 – the year dominated by the “fallout” from Fukushima – reached a new record of 45.8mlbs.
Prior to the Japanese tsunami spot uranium had reached a high of US$73 as interest began to turn belatedly back to the controversial energy source. Hedge funds had been so burnt in the 2006-07 bubble and bust that many were never to return to spot uranium trading, but continuing price rises for most commodities, and particularly for rivals coal and oil, saw a tentative reemergence late in 2010. Then along came the tsunami in March last year and the whole face of the global uranium industry changed.
The spot price quickly traded under US$50 as a result but soon stabilised above that level, suggesting actual end-users were and are still happy to pick up inventory at or below this line in the sand. Spot trading into 2012 remains at the best “discretionary”, in TradeTech's observation, as buyers and sellers eye each other off without solid commitment. Last year also saw locational discrepancies, and trading in 2012 has seen prices for delivery in Europe remain at a premium to those in the US.
Last week saw only three spot transactions totalling less than 400,000lbs, TradeTech reports. However, the emergence of a non-US utility seeking 800,000lbs of U3O8 for delivery by end-March encouraged buyers enough to see the indicative price rise by US75c to US$52.75/lb by week's end. Indeed it appears that things are hotting up somewhat in the term market.
Before Christmas TradeTech's indicative term prices sat at US$54.50 (mid) and US$62.00 (long) but the consultant has since closed the gap, showing US$55.00 (mid) and US$61.00 (long). Last week was dominated by non-US utilities in the market seeking term deliveries, with 1.2mlbs sought over four years, 1.7mlbs sought for 2014-20 delivery and 2.9mlbs for 2012-32 delivery, among other less specific but significant contracts.
TradeTech has left its term prices in place for now.
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