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November Solid For Uranium

Commodities | Dec 02 2008

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By Andrew Nelson

November was a good month for the spot uranium market, reports industry consultant TradeTech. Demand outweighed supply and purchasing activity increased. The spot price ran more than 20%.

All up, twenty-four transactions were conducted involving a total volume of nearly 4.3 million pounds of U3O8 equivalent. This saw the spot price rise from US$46/lb to US$55/lb in just four and a bit short weeks.  Much of the increase was booked in the beginning of the month as acticity levels first started to hot up, reports TradeTech. 

The later half of the month was slower and came to a quiet close in part due to the Thanksgiving holiday in the US. It was also partly due to a number of unsuccessful offers to sell around the current spot price.

Ongoing production issues that have been noted over the past few weeks and months also had a positive impact on the demand picture, with affected producers looking to buy on the spot market to lock in supplies that are contracted at a higher long-term contract price. According to TradeTech’s numbers, spot demand is currently over 3 million pounds U3O8 equivalent.

The industry consultant notes that a non-US utility is also seeking approximately 2 million pounds U3O8 for delivery by June of 2009, bolstering the demand picture.

TradeTech notes that while spot supplies are currently sufficient to meet existing demand, the distressed sellers from the last few months are quickly becoming satisfied and the excess supply that has been forced into the market by the financial crisis over the last year has now been pretty much soaked up. Sellers are now consitantly raising offer prices.

Coupled with an increasingly steady demand picture from utilities and intermediaries in November, TradeTech thinks additional upside pressure is building on the spot price.

There were no transactions reported in November in the long-term uranium market and the long-term spot price remained at US$70/lb.

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