Uranium Market Becalmed

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By Greg Peel

The Japanese earthquake and tsunami occurred in March and the ensuing uncertainty and panic surrounding the Fukushima reactor led to a sharp drop in the spot uranium price. The panic stemmed from speculators getting out fast, and a total of 45 transactions totalling nearly 7mlbs of U3O8 equivalent were recorded.

By April the market had calmed down, and indeed industry consultant TradeTech notes activity was “exceptionally calm” compared to March. Only 19 transactions were recorded for a total of just over 2mlbs U3O8 equivalent which makes it the quietest month since December 2009.

News that Energy Resources of Australia ((ERA)) had suspended processing at its significant Ranger plant due to flooding did cause prices to edge up slightly in the month, notes TradeTech, but confirmation that the US Department of Energy intended to continue with its monthly sales quota irrespective of the sudden price drop soon had the market back-pedalling once more.

In the final week of April only 425,000lbs of U3O8 equivalent changed hands, and TradeTech has ticked down its spot price indicator by US25c to US$55.00/lb. The month featured more sellers prepared to sell lower than buyers prepared to pay up, TradeTech notes, but by the final week that gap had begun to narrow. Utilities are not being hasty, but the drop in price over the month now has several evaluating spot purchases. Speculators remain the most active sellers.

No transactions were reported in the term market in April. Nevertheless, TradeTech has decided to adjust down its mid-term indicative price to US$59.00/lb from US$62.00/lb to reflect the fall in the spot price in the same period. Clearly there is incentive for buyers to buy at spot rather than term and simply hold the material when prices are low. TradeTech's long-term indicator remains at US$68.00/lb.

 

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