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Uranium Week: Still Falling

Commodities | Dec 06 2016

Supportive news on both the demand and sell sides has not prevented the uranium spot price falling further still.

By Greg Peel

While the US was taking a break for Thanksgiving and markets were largely unattended, the spot uranium price fell a further US75c to end November on a new low of US$17.75/lb, based on industry consultant TradeTech’s price indicator. That price was unchanged as of last week despite a reasonable level of activity.

TradeTech reports seven transactions in the spot market last week totalling one million pounds U3O8 equivalent. The dip under US$18/lb did encourage some buying interest from utilities and even producers were in buying at low prices, but still the trajectory remains to the south.

Weak market conditions have forced the world’s biggest corporate uranium producer, Canada’s Cameco, into offering its workers extended paid vacations in the upcoming northern summer of 2017. In order to reduce costs in the low price environment, Cameco will halt production at its MacArthur River and Cigar Lake mines and Key Lake processing mill for several weeks.

On the demand side, there was much relief when the State of Illinois passed a landmark energy bill which will make it commercially viable for energy provider Exelon to maintain operations at its Clinton and Quad City reactors. In short, the bill recognises nuclear energy as carbon-free, alongside subsidised alternative energy sources.

While restricted to Illinois, the bill should provide hope legacy reactors in other US states may not be forced into closure if other state legislatures follow Illinois’ lead.

But what has to happen to turn the uranium price around?

Two transactions were reported in the uranium term markets last week, each totalling less than 1mlbs U3O8 equivalent. TradeTech reports several utilities are currently evaluating term contracts but yet the consultant was once again forced to drop term price indicators at the end of last month.

The mid-term indicator has fallen US$1.50 to US$19.00/lb and the long-term indicator has fallen US1.00 to US$34.00/lb.

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