Commodities | May 05 2015
By Greg Peel
As recent Uranium Week reports have noted, utilities have been expected to enter the market to purchase material for some time now but have not shown any urgency. Spot prices have thus slipped away from an earlier peak. Last week the market was disrupted when a US utility entered the market to actually sell a block of inventory, sending prices tumbling.
Lower prices did encourage some utilities and producers to enter the market as buyers, industry consultant TradeTech reports, but not in sufficient volume to offset downward price pressure. TradeTech’s spot price indicator closed the month of April at US$36.00/lb, down from US$39.40/lb at end-March. The end of last week saw a further fall of US50c to US$35.50/lb, which implies a week-on-week fall of US$3.00/lb.
A total of 23 transactions representing 4.1mlbs of U3O8 equivalent were conducted in April, TradeTech reports. Deals were completed at successively lower prices. Sellers were mostly intermediaries and producers but utilities were also seen on the sell-side.
Lower prices also enlivened the term contract market, TradeTech notes, in which nine transactions totalling over 14mlbs of U3O8 equivalent were conducted for various delivery windows stretching from 2016 to 2025. Utilities from the US, Europe and Asia dominated the buying. While factors such as geopolitical risk, financial stability, diversity, and source of production and/or supply are always taken into consideration by buyers when inviting suppliers to submit offers, these issues are particularly evident at the present time, TradeTech reports.
This has led to disparity in pricing across term contracts, and a preference for medium term contracts over longer term from the sellers. This has resulted in TradeTech reducing its mid-term price indicator to US$40.25/lb from US$43.50/lb, while the consultant’s long term indicator falls by a lesser degree to US$49.00/lb from US$50.00/lb.
News over the month included Japan moving closer to its first reactor restarts, India entering the uranium market as a buyer, and the legal battle continuing in the US over intended Department of Energy inventory sales. The latest news is that Sweden’s state-owned energy company is now planning to shut down two reactors, in 2018 and 2020 – seven years earlier than previously planned.
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