- Japan must restart nuclear fleet to keep recovery on track
- US$80+ needed to incentivise new supply
- RBC sees US$65/lb in 2014
- US$80/lb by 2017

By Andrew Nelson

Commodities analysts at RBC Capital Markets expect uranium demand to increase at a rate of 4.7% per year out to 2020 on the back of the planned nuclear power growth in China. Near term price prospects are a different story, with increasing expectations for a quick restart of the Japanese nuclear fleet underpinning the hopes of a slowly growing number of analysts.

The Canadian investment bank is predicting a slow but steady re-starting of idled reactors as idled plants come to grips with what is a fairly stringent new regulatory environment. Excluding Japan’s three reactors that are more than 40 years old and a few more that sit on known fault lines, RBC sees the fleet back to generating 80% of pre-Fukushima levels by 2018.

Canadian brokerage house Toll Cross notes the idled fleet once generated 30% of the nation’s power and used up 18-20 million pounds of uranium every year. Since the fleet was mothballed, Japan’s imports of oil, LNG, coal and LPG have risen from 1.4tr yen per month in March 2010 to 2.2tr yen per month in March 2013. That’s US$8.4bn per month, or more than US$100bn a year. Recommencing nuclear power would cost only US$5bn.

The broker pints out that Japan may well boast a US$6tr economy, but it cannot afford this kind of hit to its trade balance. The broker reasons that Abenomics just can’t work if the devalued yen is offset by such a drastic increase in the cost of energy imports. Thus, expect reactor restarts sooner than one might expect, says Toll Cross.

The supply picture looks pretty much as it did three months ago, although the bank has trimmed its 2013 supply estimate by 2 million pounds to account for the disruption at Areva’s Somair mine in Niger. While by no means a huge amount, on recent trends it’s about a month’s worth of volume on the spot market. Still, the surfeit has reduced the bank’s forecasted 2013 surplus by around 25% to 5.1m pounds. Out year assumptions are unchanged.

These unchanged assumptions are pointing to this year’s surplus turning into a supply deficit in 2014. 2015 and 2016 are expected be balanced years in terms of supply and demand as mega-project at Cigar Lake ramps up. But from 2017 onwards, the market will be facing increasing deficits. In fact, the bank sees supply to the market falling some 35 million pounds short by 2020 on current levels of supply.

Thus new supply will need to be added, but prices are not only going to need to push back above the US$40 they are sitting just under now, but will really need to exceed US$80/lb if there is going to be sufficient incentive to develop and bring that new supply online and to the market.

This lack of demand and too much supply is not a new dynamic, rather it is one that has been playing out for more than three years. During this time, both spot and term market prices have remained under significant pressure. There was a bit of false hope sparked in the beginning of the year when spot prices ticked consistently higher, but that wore off long before the end of this year’s first quarter and the price has been in steady, if slow reverse ever since.

Prices have flip flopped a dollar above and below US$40/lb for months now and RBC sees this level as being a reasonable support. But once those Japanese reactors start coming back on line, the absence of highly enriched uranium from the US and Russia’s now expired deal will surely be felt. RBC expects prices will start to track slowly higher towards the end of this year.

The bank’s uranium spot price assumption for 2013 has been trimmed US$3.29 to US$45.00/lb to account for market movements so far this year. The spot price forecasts for 2014 through 2017 are unchanged at US$65, US$75, US$75 and US$80. The long-term price forecast remains at US$65.00/lb.
 

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- Spot price up 10c
- Still below US$40
- Japan may still come to the rescue

By Andrew Nelson

Last week was a slow one on the uranium market, with many participants attending the World Nuclear Fuel Market conference in Turkey. While they might have picked a more restive city than Istanbul, talk was upbeat about the shift from the established nuclear power markets of Europe and North America to the growing markets of Asia.

Industry consultant TradeTech reports just four transactions last week, accounting for just over 400,000 pounds of uranium. This saw the Weekly U3O8 Spot Price Indicator pick up US10c to US$39.85/lb.

There is an increasing amount of slowly emerging demand in the term market and it could end up helping to push spot prices higher. But it hasn’t to date. The drop below US$40 has started to pull in a few discretionary buyers, but they remain especially price sensitive and TradeTech fears a price above US$40/lb will scare many of them off.

Thus we are left with the exact same quandary that has been facing the market for the past few years, one where suppliers don’t want to drop prices any further, while buyers want cheap stock with longer dated deliveries. This would seem to underscore the oft discussed assertion that there is still sufficient supply and stockpiled material to see producers through at least the near term.

Three new non-US utilities entered the mid-term market last week looking for a combined 3.5m pounds or so for delivery out as far as 2020. There were also two non-US utilities still in the market, shopping for 4.5m pounds out to 2020.

But aside from the window shopping, not much else happened in the term market seeing TradeTech’s Mid-Term U3O8Price Indicator stay put at US $44.00/lb, while the Long-Term Price Indicator holding firm at US$57.00/lb.

TradeTech does expect to see some new demand in coming months, with talk that a number of US and non-US utilities will need to start thinking about entering the term market. Requests for proposals are expected in the next couple of months.

There is one ray of sunshine attracting the hopes of uranium sellers and it is the growing belief that Japan and going to have to turn the nuclear energy back on and soon if they have any chance of maintaining their fledgling economic recovery.

Before Fukushima, nuclear provided about 30% of the nation’s electricity and if the country wants to rack up a massive trade imbalance via the increasing importation fossil fuels, they are going about it the right way.

This is the double edged sword of Abenomics at work. The yen fell by nearly 19% in May and while this makes Japanese exports more affordable, it drives up fossil fuel import prices. Academic Ulrike Schaede wrote in Bloomberg recently that Japan is already running up a whopping trade imbalance by importing energy.

“Looking just at the four biggest categories (oil, liquefied natural gas, coal and liquefied propane gas), the monthly value of Japan’s energy imports jumped from 1.4 trillion yen (before March 2010) to 2.2 trillion in March 2013. In March, that was about $17 billion; now add 20% in exchange-rate shifts to get $22 billion per month,” she wrote.

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- Uranium spot price falls below US$40/lb
- Spot market slow
- Activity, but no sales in term markets
- Probably more of the same until July

By Andrew Nelson

Stubborn uranium sellers have been holding off speculative buyers for a while now, unwilling to drop prices to get deals done. Consumers, on the other hand, have little short term requirement and many are out there cherry picking the market. That has been the way of things for quite a while now, that is until last week.

There were only four sales booked in the spot market last week, which saw 500,000 pounds of U308 change hands. More importantly, sellers finally started to buckle in their resolve and in turn, the spot price fell below what has been key psychological support at US$40/lb. This is the first time we’ve seen sub 40 price since March 2006.

Industry consultant TradeTech’s Weekly U3O8 Spot Price Indicator was only down US$0.65/lb, but with the price dropping to US$39.75/lb, one wonders whether the drop, at least in psychological terms, will turn into something much greater. US$40 has been tested time and time again, and now it’s finally been broken.

TradeTech reports that current spot demand remains thin and the only way to conclude deals at the moment is to drop prices, grin and bear it. There is a little ray of sunshine in that one non-US utility has finished looking at offers for over 500 thousand pounds, with a supplier soon to be named. The price from this transaction will be highly anticipated.

A number of utilities entered the term market last week looking for material further down the track. A total of four non-US utilities are looking for a combined 7.4m pounds of uranium for delivery from 2014 out to 2020. There are also several US and non-US utilities that are expected to solicit proposals over the next few months.

Despite the new term demand, no new transactions were concluded, leaving TradeTech’s Mid-Term U3O8 Price Indicator at US$44.00/lb, while the Long-Term Price Indicator was flat at US$57.00/lb.

There are still a number of analysts out there spruiking “the supply is running short of demand so the price must lift someday” message. Industry website uraniuminvestingnews.com recently spoke to Rob Chang, a metals and mining analyst at Cantor Fitzgerald and he’s on the same page.

“Looking out over the longer term there is still a fundamental supply/demand gap. That gap is soon to be made worse by the current price environment, which will certainly not support new projects — it’s not even incentivizing producers,” said Chang.

Chang sees the chance of a price catalyst emerging from Japan’s new nuclear safety regulations due out in July, noting that according to Cameco, three are Japanese utilities looking to submit restart applications in mid-July. This means there could be somewhere between five to eight reactors turned on this year

“There is also word that at least two other utilities may also submit applications quickly following the July introduction of regulations, bringing the total to five utilities,” said Chang. In the meantime, we’ll all have to sit back and wait.
 

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By Andrew Nelson

Uranium sellers were not inclined to sell in May and unfortunately for them, the buyers weren’t really buying either. The spot price traded in a tight range over the month, starting at US$40.50 per pound and then dropping to US$40.25 before heading back up to end the month at US$40.40 per pound.

The same old story continued to play out, the one in which sellers can’t/don’t want to drop prices further versus buyers that really don’t need the stock. Industry analyst TradeTech reports that producers have been going almost door to door to shift uncommitted material off the shelves this year at or around current prices, but buyers are increasingly focused on 2014 deliveries.

There was a bit of hope earlier in the month that prices could start pushing higher on news of a terrorist attack and subsequent production stoppage at the Somair uranium mine in Niger. The problem with this ill-conceived hope is that it looks like production at the facility will kick back on over the next few months and with little disruption to delivery commitments.

With buyers not buying and sellesr not wanting to sell at lower prices, market activity in May was slow. TradeTech reports only 23 transactions were concluded, accounting for nearly 3 million pounds of U3O8 equivalent. While by no means running hot, May was at least up on the 2.4m pounds that changed hands in April.

By the end of the month, which was also the end of the week, TradeTech’s Exchange Spot Price Indicator had come off US10c to US$40.40.

There was a tiny ray of sunshine that poked through the blinds towards the end of the month. TradeTech reports that just before the final bell, one non-US utility entered the market in a search for offers of over 500,000 pounds. No delivery date was noted.

There were also a few signs of life on the term market, with four transactions concluded, seeing 1.3 million pounds of U3O8 find a new home. Despite the action, TradeTech's Mid-Term U3O8 Price Indicator was unchanged at US$44.00 per pound, while the Long-Term Indicator was also unchanged at US$57.00 per pound.
 

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By Andrew Nelson

Last week was a slightly busier one in terms of the deals concluded and the amount of stock shipped on the global spot uranium market. The problem remains that buyers just aren’t faced with any pressing needs and increasingly cash-strapped sellers are growing more and more unwilling to accept lower prices.

All up, seven transactions were concluded over the course of last week and the action saw some 900,000 pounds change hands. Industry consultant TradeTech reports that the sell side was represented by producers and traders, while the buyers were utilities, producers, and traders for the most part.

A theme that has been developing for months now is that buyers are increasingly looking for delivery either late this year or early next year. TradeTech notes that most of the business transacted last week was for delivery over that period.

There was also a fair bit of turmoil in the uranium world last week. First, there was a terrorist attack on AREVA’s Somair uranium mine in Niger. This resulted in one death and 14 injuries and AREVA has suspended all production indefinitely. Production from Somair runs at around 5m pounds a year.

The US Energy Commission also announced last week that it was unable to gain approval from the US Department of Energy to extend operations at the Paducah, Kentucky enrichment facility. USEC is now preparing to cease enrichment operations at the facility this week.

By last Friday, TradeTech’s Weekly U3O8 Spot Price Indicator was at US$40.50 per pound, down US$0.25 from the prior week’s value. There were no deals or new demand reported in the term uranium market last week, seeing TradeTech’s Mid-Term U3O8Price Indicator stay put at US$44.00 per pound, while the Long-Term Indicator was flat at US$57.00 per pound.

Analysts at Macquarie had a few things to say about uranium last week as well. The first thing the broker notes is that it’s pretty much the same market as we had three years ago, with very little having changed. The market remains fundamentally over-supplied and naturally, prices keep slipping. The safety net continues to be provided by China and its slow, but steady stockpiling.

The broker also couldn’t help stating the obvious, saying that within the next few years additional primary mine supply will need to be added. What’s more, the price will have to increase in order to incentivise this.

The problem that Macquarie has about this statement is that this was the case three years ago and it is still the case now. Three years ago we thought the inflection point was five years off, three years later and Macquarie still thinks it is five years off.

With uranium from dismantled Russian nuclear weapons leaving the market at the end of this year, the market will undoubtedly tighten. But Macquarie still thinks supply will be matching demand at that point given secondary supply is continuing to top up the supply side. The Japanese have certainly not been using their uranium over the past few years and their stockpile constitutes yet another supply side overhang.

That leaves us with the same problem seen in other mining industries, the only support is Chinese stocking and who knows when this will run out? The Chinese are currently importing a lot more uranium than needed for the operation of existing plants, that’s for sure. The problem with Chinese buying is that deals are being done on the dips, so record levels Chinese uranium imports over the past few months have done nothing to lift the spot price.
 

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By David Fessler, Investment U Senior Analyst

Something big is about to strike the mining industry. When it does, savvy investors have a grand opportunity on their hands.

It all started back in 1993 when the United States and Russia signed a historic agreement creating what’s called the “Megatons to Megawatts” (MTM) program.

The program’s goal is turn the deadly highly enriched uranium inside Russian nuclear weapons into the fuel for American power plants.

When the program comes to an end in December, it will have converted 500 metric tons of highly enriched uranium (about 20,000 nuclear warheads’ worth) into fuel for America’s nuclear reactors.

On March 4, 2012, Russians re-elected Vladimir Putin for a third term. Given Putin’s disdain for the West, it’s doubtful the MTM program will continue.

It will leave a big hole in the world’s supply of enriched uranium. It will also leave Russia in the uranium catbird seat. As the supply from dismantled warheads wanes, worldwide uranium prices could double from current levels.

Ready to Spike

Take a look at the graph below…

The spot price for uranium soared to nearly $140 per pound in 2007. Then, almost as quickly as it soared, the price plummeted to the $40 level in early 2009.

The green metal managed to claw back to $70 per pound in early 2011. But then a nuclear disaster shook the sector… Fukushima. Following an earthquake and a disastrous tsunami, the Japanese plant experienced a deadly meltdown.

Next to Russia’s Chernobyl accident in 1986, Fukushima is the only incident to reach Level 7 on the International Nuclear Event scale.

Countries around the world reacted hastily.

- Japan shut down all 50 of its nuclear reactors.
- Germany shut down 8 of its 17 reactors and resolved to phase out the rest by 2022.
- Switzerland decided on a slow phaseout starting in 2019 and extending through 2034.

And prior the Fukushima disaster Austria, Sweden, Italy and Belgium had plans to eliminate their nuclear facilities.

The sudden plunge in demand once again sent uranium prices to the $40 level. But prices won’t stay this low for much longer.

No Other Choice

Japan’s initial reactor shutdowns and those planned by European countries will have little, if any, effect on long-term uranium demand.

Right now, there are 435 nuclear power plants in operation around the globe. An additional 67 more are under construction. Incredibly, despite the Fukushima fallout, another 317 are proposed and could be on line in as few as 15 years.

A World Nuclear Association report from August 2011 (five months after Japan’s meltdown) had this to say about the growth of nuclear power:

“[There are] 60 reactors being built around the world today. Another 150 or more are likely to come online during the next 10 years. Over 200 are further back in the pipeline.

“The global nuclear industry is clearly going forward strongly. Countries with established programs are seeking to replace old reactors as well as expand capacity.

“An additional 25 countries are either considering or have already decided to make nuclear energy part of their power generation capacity. Most (over 80%) of the expansion in this century is likely to be in countries already using nuclear power.”

For uranium bulls, it’s great news. Demand is about to outstrip supply.

In 2011, the world’s reactors used 165 million pounds of uranium. At the same time, global production amounted to just 143 million pounds.

The MTM program was there to fill the balance.

But that’s about to change…

When the deal with the Russians ends, 24 million pounds of uranium supply will instantly disappear. And it will happen just as global demand begins to surge.

Annual production will need to increase as much as 136,000 tons by 2035 in order to keep up with demand. Not only will we need more mines, we’ll also need more processing facilities to turn raw uranium into a product suitable for nuclear fuel.

Bottom line… somebody’s going to get rich.

One of Many

While Kazakhstan has emerged as the world’s largest supplier of uranium, Canada is No. 2. The biggest supplier in Canada is Cameco Corporation (NYSE: CCJ). It’s one of many companies that will ride the back of the uranium bull.

Cameco mines are responsible for about 14% of global uranium production. It owns mines in Canada, the United States and Kazakhstan – which collectively hold 465 million pounds of proven and probable reserves.

The company’s flagship operation is the McArthur River Key Lake mine. Located in Saskatchewan’s Athabasca Basin, the mine is the largest high-grade uranium mine in the world.

Its average ore grade is 100 times greater than the world average.

Cameco also owns the world’s second largest deposit of high-grade uranium. Its Cigar Lake mine, also in the Athabasca Basin, is still under development. Production is on schedule to start by the end of June. Once the mine is running, it will produce 18 million pounds of uranium per year.

The company expects its total annual production to be 36 million pounds by 2018.

Cameco’s share price has seesawed between $16.41 and $23.23 over the past year. The stock is currently trading about $2 off its highs.

The mainstream media and the investing herd will soon get wind of the coming uranium shortage. Shares of Cameco, along with those of other uranium miners, could explode higher on the news.

As the program that kept the uranium bull in the pasture comes to an end, something big is about to stir the mining industry.

Good investing,

Dave

Reprinted with permission of the publisher. The above story can be read on the website www.investmentU.com. The direct link is: http://www.investmentu.com/2013/May/tiny-mining-sector-about-to-soar.html

Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

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By Andrew Nelson

Last week was a slow, if not somewhat significant week on the uranium spot market. Slow because only three deals were done, with just 300,000 pounds U3O8 changing hands. Significant because there is a new US Secretary of Energy, and more so because China confirmed at last week’s ninth Annual China Nuclear Energy Congress it had officially re-started its nuclear program .

Industry consultant TradeTech reports China quietly restarted its nuclear build program back in November 2012. The goal is to lift the country’s total installed nuclear generation capacity to around 60GW by 2020. China has 30 reactors under construction right now, which represents about 40% of global nuclear power construction presently.

These plans will of course require significant uranium resources over the next 60 years, with demand pegged 39 million pounds U3O8 by 2020. To ensure the demand is met, China’s CGNPC Uranium Resources Company will look to invest in the development of domestic and overseas uranium resources, including projects that are already under development in Australia and Africa.

As part of a round table at the conference, Cameco President James Dobchuk confirmed that the current market does not in any way support the production that is needed for future uranium supply.

The head of CGNPC, Mr. Zhou Zhenxing, agreed, but also noted today’s market price is not that significant, as he believes it there is enough upside for continuing development. However, he also concurs with Dobchuk that price improvement is needed to stimulate new production for the future.

Still, China’s pledge to maintain what is an ambitious nuclear program has certainly sparked some optimism amongst uranium producers and sellers. They were reluctant to lower offer prices before even though we’re heading into the summer season, a traditionally slow time in the uranium market.

TradeTech did have some interesting analysis that should prove insightful, if not useful, over the next few months. As noted earlier, summer is traditionally a slower period for uranium. However, TradeTech notes the summer months are not nearly as predictable as conventional wisdom would suggest.

After taking a closer look at monthly spot transaction volumes over the summer months of the past five years, it turns out the June, July, and August period ran above average in 2009, and was very active in 2010. TradeTech suspects an increasing number of sellers believe this could be the case in 2013 as well. There remains a growing expectation for new demand to enter the market, with several utilities considering discretionary purchases at the moment.

This new found optimism was evident last week, even in the limited transactions and slim volumes were booked. Deals were conducted at or near the prevailing spot price, which meant by the end of the week there was no change to TradeTech’s Weekly U3O8 Spot Price Indicator, which stayed put at US$40.75 per pound.

There was no activity in the term market. As such, TradeTech’s Mid-Term U3O8 Price Indicator remains at US$44.00 per pound, while the Long-Term Indicator stayed put at US$57.00 per pound.
 

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By Andrew Nelson

The spot uranium market crawled along last week, with a handful of trades and a fairly small amount of product changing hands. The market seemingly remains poised between sellers unwilling to play the discount game any longer and buyers that just don’t have a desperate need for supply.

Industry consultant TradeTech reported just five deals last week, with 500,000 pounds of uranium finding new homes. Traders and utilities were the buyers for the most part, with TradeTech noting that prospective new buyers continue to trickle in to hunt for bargains.

The big issue is that current market supply is enough to cover what sparse demand there is. And sellers, sick of offering sub-economic or close-to-it prices, are increasingly unwilling to move any lower. TradeTech reports this theme played out clearly all last week, with the transactions that were closed being booked at, or very near, spot.

This dynamic continues to keep buyers on the fence and sellers at home, given the slowly increasing demand that is being seen is still very price sensitive.

That meant the stubborn sellers prevailed last week, with TradeTech’s Weekly U3O8 Spot Price Indicator finishing last week at US$40.75 per pound, up $0.15 from the prior week’s value.

Analysts at Macquarie had a bit to say about the uranium market last week, noting Kazakhstan, the world’s largest producer of uranium, lifted output in 2012 to 20,900t from 19,450t. This adds up to around 37% of global output. What’s more, the nation’s state-owned miner Kazatomprom reported a few weeks back that the 1Q saw a further 7% production increase year on year.

At the same time Cameco’s much anticipated Cigar Lake project in Canada  is due to ship first material to sometime this year, with a steady ramp-up expected to take output to beyond 30m pounds by 2016.

Taking just Cameco and Kazatomprom into account, Macquarie beleives that any sort of significant additional mine supply probably won’t be needed anywhere until at least 2016-17 and that’s despite the supply from the Megatons to Megawatts Program exiting the market this year.

Industry tracker U308.biz had a chat with Cantor Fitzgerald metals and mining analyst Rob Chang last week and he thinks this may well be the year uranium price turns the corner and pushes higher. He told the website he sees a chance of some upward pressure once Japan releases its new nuclear safety regulations in July.

Chang mentioned some commentary from Cameco, which is expecting three Japanese utilities to submit restart applications in mid-July. This could add up to somewhere between five to eight reactor restarts this year, said Chang. He said he has also heard some talk pointing to two other utilities that may also submit applications depending upon how the first three go. Five reactor restarts in Japan would be a distinct positive, not only in terms of added demand, but even more so from a sentiment perspective.

He also confirmed TradeTech’s view that utilities currently have enough supply to meet requirements, at least for the short to mid-term. Longer term, however, Chang confirms there is still a fundamental supply/demand gap. And with current prices nowhere near enough to support new work, supply constraints will only get worse in the near-term. This should ultimately push prices higher, with the only one question remaining: When?

In the meantime, there was no action in the term uranium market last week. There are still a couple of utilities and a couple more non-utilities shopping around, but the market was otherwise quiet. TradeTech’s Mid-Term U3O8Price Indicator was flat at US$ 44.00 per pound last week and the Long-Term U3O8Price Indicator was unchanged at US$57.00 per pound.
 

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By Andrew Nelson

April was a funny old month for uranium. After a couple of mostly flat months in February and March, uranium prices dropped through most of April. Demand in general was fairly thin and “got to have it” demand was really not there at all.

Last month saw a total of 17 deals concluded, which in turn generated about 2.4 million pounds of U308 equivalent turnover.

The buyers that did emerge were generally more interested in deliveries towards the year end and early next year. Industry consultant TradeTech notes it was this distinct lack of near term buyers coupled with news of new problems with import licenses at the Chinese border that prompted sellers to lower offer prices. At one point over April, prices had fallen low enough to test US$40/lb, but did not break through.

By the end of April the lower prices did start to draw out some buyers and as soon as they were seen, sellers pulled back prices and started to draw them higher. At the end of the month, TradeTech’s Exchange Value was sitting at US $40.50/lb, which was down US$1.75/lb from the March 31 Value.

Activity in the term uranium market was even slower in April, with only one mid-term delivery transaction booked for the month. TradeTech notes there are still a few utilities that continue to evaluate whether or not to enter the market, but they haven’t yet. The one deal saw TradeTech's Mid-Term U3O8 Price Indicator drop US $2.00 to US$44.00/lb. The Long-Term Price Indicator was unchanged from March’s US$57.00/lb.

Last week saw the spot uranium price tick a little higher on the back of six deals that saw 900,000 pounds of U3O8 equivalent change hands. TradeTech reports that the buyers included utilities and traders, while the sellers were mostly producers and traders.

There was a little change in demand dynamics from last month as well, with a number of buyers looking for delivery sooner rather than later. Still, the majority are still looking for deliveries later in the year, or early next. This hasn’t done much damage to the price, though, as TradeTech notes the most aggressively priced material was pretty much cleared over April, with the sellers still standing given a little space to lift prices through last week.

By last Friday’s close, TradeTech’s Weekly U3O8 Spot Price Indicator was at US$40.60/lb, a modest rise of US$0.10 from the week prior, but an increase nonetheless.

There’s also still a bit of demand left in the spot market, with two non-US utilities looking for more than 650,000 pounds U3O8 equivalent for spot delivery.

Last week in the term market was as busy as the entire month of April, with one deal concluded. TradeTech notes that AREVA has been awarded a contract by a US utility to supply around 1m pounds over several years. Yet despite the activity, there were no changes to the TradeTech’s term prices, with the Mid-Term U3O8Price Indicator staying out at US$44.00/lb and the Long-Term Indicator remaining at US$57.00/lb.

There are still a number of utilities sitting on the sidelines of the term market. TradeTech advises that there’s one non-US utility looking for around 2m pounds contained in UF6, or enriched uranium product for delivery between 2014 and 2020. This utility is currently looking at offers.

Another non-US utility is looking for 1m pounds for delivery over a five-years and one US utility is looking at offers for about 1.2m pounds. There is also one more non-US utility reviewing offers for 750,000 pounds for deliver y between 2014-2018, while one last utility is seeking offers for delivery beginning in 2017.
 

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By Andrew Nelson

Last week on the uranium spot market might not have been busy, but at least it was positive. There were just four transactions reported, with 900,000 pounds of uranium finding new owners.

Demand remains thin and patchy, with discretionary purchases by utilities, producers and financial entities driving what little action there was in the market. The good news last week was that buyers were prepared for the most part to pay a little bit more in order to secure stock. Industry consultant TradeTech reports that this was especially the case for deliveries due later in the year.

It’s not much, but TradeTech’s Weekly U3O8 Spot Price Indicator lifted US$0.25 to US $40.50 per pound.

Industry website U308.biz had a sit down with Kivillaq Energy CEO Jim Paterson last week and he had a few optimistic things to say the prospects for uranium prices.

“It's certainly something that's cyclical, and the price of uranium has to go up. In the current state of things I think that there will be a significant number of exploration and expansion projects that are cancelled because of uranium market prices, especially the larger-cap projects,” he said.

“We're already seeing that. Of course, that's going to have serious ramifications on the supply pipeline in the near future, and we're going to see a backlash against this low pricing environment.”

Yet as always and despite the optimistic talk, the reality of it is that this market is still not in good shape, at least demand wise. There was no new demand, nor any transactions reported in the term uranium market. There are a number of utilities sitting on the sidelines waiting for a good spot to jump into the term market, but that has been the case for a while now.

The term market currently features three non-US utilities looking for a combined 3.75m pounds U3O8 equivalent for delivery from 2014 out to 2020. One US utility is looking at offers for about 1.2m pounds, with one last utility is seeking offers for an undisclosed amount of material to be delivered beginning in 2017.

In the meantime, TradeTech’s Mid-Term U3O8 Price Indicator stayed put at US$46.00 per pound, while the Long-Term price was mired at US$57.00 per pound.
 

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