Commodities | Jun 25 2013
By Andrew Nelson
Last week was another slow one on the uranium spot market. There were just three transactions concluded, reports industry analyst TradeTech, who noted 350, 000 pounds of stock changed hands.
The thin volume did little to help the spot price, with TradeTech’s Weekly U3O8 Spot Price Indicator slipping US10c to US$39.75/lb. While not a significant move in and of itself, what is relevant is that the price remains below what is becoming a key psychological barrier at US$40/lb.
Sure, the drop below $40 is starting to draw in buyers, but they are speculative buyers only interested in the low, low prices on offer for the most part. TradeTech did report some new discretionary buying interest starting to emerge, with four utilities reportedly heading into the market to test the waters over the next few weeks.
All up, the new demand totals around 900,000 pounds, but once again and as has been increasingly the case over the previous few months, deliveries aren’t being sought until later this year and early next. Making matters worse is that this new demand has also been drawn out by the low prices, with prospective buyers looking to lock in prices even below those being currently offered by the bulk of sellers.
TradeTech notes there has been almost no action involving shorter dated deliveries even for stock priced a little lower than the market. The consultant points out that there are currently a handful of sellers offering sub-spot prices, but for immediate delivery. As we can see by the market activity data, there haven’t been many takers.
For the most part, sellers continue to hold firm against the speculative demand for lower prices. One of the biggest supports is the increasing expectation of higher prices later this and through next year once Japan approves the restarting of its nuclear fleet. (More on this in Japan’s Reactor Restarts Will Be The Turning Point For Uranium).
Despite the longer dated demand, the term market saw no action last week. There is growing demand in the market, with a number of non-US utilities out there looking for offers for a total of around 8m pounds with delivers ranging from 2014 to 2020. TradeTech continues to expect some new demand over the next few months, with a number of US and non-US utilities contemplating taking the plunge.
The speculation was little comfort to last week’s numbers, with TradeTech’s Mid-Term U3O8Price Indicator staying put at US$44/lb and the Long-Term Price Indicator remaining at US$57.00.
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