Commodities | Sep 01 2015
By Greg Peel
The buyers aren’t exactly kicking the door down in the spot uranium market at present, but those trying to obtain material are being forced to pay incrementally higher prices. Now that those sellers who needed to offload material ahead of the summer shutdown have been satisfied, remaining sellers see no reason to hit the bid.
Recent months have seen the spot uranium market revert to what it used to be – simply a small side market to cover shortfalls and mismatches – beyond the “real” market of end-users securing supply through term delivery contracts. The spot market is also the market for speculation, but there hasn’t been a great deal of that going on lately.
Spot market pricing will nevertheless reflect demand/supply in the term markets at any time, so while spot market volumes are relatively anaemic at present, the “real” market is reflecting growing demand and thus incrementally pushing up prices.
Industry consultant TradeTech reports only five transactions totalling 450,000/lbs U3O8 equivalent in the uranium spot market last week. However, three utilities are currently evaluating offers to supply up to 6.5mlbs of U3O8 over periods beginning in 2017. Hence while TradeTech’s term price indicators remain unchanged for now at US$38.25/lb (mid) and S$45.00/lb (long), the consultant’s weekly spot price indicator has again ticked up by US25c, to US$36.75/lb.
In global nuclear news last week, Egypt signed an agreement that will see Russia build the country’s first commercial nuclear power plant. The world’s leading producer of uranium – Kazakhstan – signed an agreement with the International Atomic Energy Agency to be the location for an internationally controlled bank of low-enriched uranium to ensure fuel supply for power plants on the one hand and stymie nuclear proliferation on the other.
South Africa’s nuclear power ambitions have hit a snag, given opposition is building within government ranks over the planned US$100bn investment in nuclear energy. The country may simply not be able to afford it, opponents argue.
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