Commodities | Jan 21 2014
By Greg Peel
It was in August last year when the spot uranium price reached its recent nadir (and seven-year low) in trading at US$34/lb. It was in that month an institutional buyer entered the market looking for offers of one million pounds of U3O8. We could justifiably assume the buyer was looking to take a speculative position at the lows in price, but the order managed only to scare everybody off.
Knowing there was a big speculator in the market, sellers of uranium, who had been forced up to that point to chase ever lower bids, pulled back on offer prices. Those actually needing to buy uranium at the time were forced to pay up and the spot uranium price enjoyed a bounce. It was nothing spectacular – spot prices briefly traded above US$36/lb once more – but given analysts had begun to argue, on the weight of the demand-supply balance at the time, that uranium prices were set to rise, a sense of relief started to permeate and the pundits assumed the rise was indeed in train.
Having not been set at the price it wanted, the institutional buyer then pulled out. Normal programming was restored, the spot uranium price waned once again, and analysts, while not necessarily accused of being wrong, were at least seen to have been premature in their call.
Well, they’re baaack.
Industry consultant TradeTech reports that the same buyer has resurfaced once more, again looking for offers for one million pounds of U3O8. The difference this time is the spot uranium price has already improved a little of late. Analysts are still calling an inevitable bounce in uranium prices, and indeed are more insistent than they were previously given the various supply restraints which have impacted on the market since late last year. Will the buyer chase the sellers this time? Or will it just be déjà vu all over again?
The spot market saw 800,000lbs of U3O8 equivalent change hands last week, TradeTech reports, across six transactions. The price remained flat right up to the end of the week, when you know who resurfaced.
In the term market, a buyer of 500,000lbs for 2014-16 delivery has selected a seller, TradeTech notes, while several utilities are evaluating offers across varying delivery dates.
TradeTech’s spot price indicator rose US$1.00 to US$36.00/lb by week-end. TradeTech’s term price indicators remain unchanged at US$37.50/lb (mid) and US$50.00/lb (long).
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