Commodities | Apr 05 2016
By Greg Peel
On the strength of volumes out to term contract tender one would expect uranium prices to be well supported at present, but indeed the opposite is true. Tenders remain outstanding from months ago and while lower prices have indeed encouraged more requests for proposal to appear from utilities in March, no one on the end-user side appears in any sort of hurry.
The uranium market, it would appear, remains well supplied. Only the prospect of lower prices is bringing in buying interest. That interest remains firmly rooted in term markets and not in the uranium spot market, where traders and intermediaries are fighting over diminishing volumes.
Volumes did at least tick up in March after a light start to 2016. Some 26 transactions were concluded in the spot market for a total of 3.5mlbs U3O8 equivalent, industry consultant TradeTech reports, up from 2.3mlbs in February. But with utilities taking a long time to assess pricing for term delivery contracts, spot market traders became increasingly frustrated over the course of the month and offloaded material at ever lower prices.
TradeTech’s spot price indicator closed the month at US$28.25/lb, down US$3.85 from February’s US$32.15/lb close. The consultant’s weekly spot price indicator fell further Friday, April 1, to US$27.50/lb, representing a US$1.90 week on week fall.
Transaction volume also increased in term markets in March but only to four transactions concluded representing 4.7mlbs U3O8 equivalent. Despite a decent volume still out to tender, TradeTech has been forced to lower its term price indicators once more. The consultant’s mid-term indicator has fallen US$4.00 to US$29.90/lb and long-term indicator has fallen US1.00 to US$43.00/lb.
The price gap to longer term indicative pricing reflects a greater reluctance from term sellers to reduce prices to meet demand, as is in the case in the spot market, given both orders outstanding and the ongoing assumption that more substantial buying interest will indeed soon emerge.
An assumption that has been held for many months now.
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