Commodities | Sep 29 2015
By Greg Peel
It’s been a few weeks now since three utilities individually tendered for mid-term delivery contracts for a total of 6.5mlbs U3O8 but as yet no news has been forthcoming. The uranium spot market has been waiting for these deals to be finalised so as to provide some indication in pricing.
Aside from these three deals in particular, the uranium market had expected further buy-side interest to emerge as activity resumed following the northern summer, but as yet nothing much has materialised. With the end of the quarter approaching, a handful of spot sellers tired of waiting and lowered their offer prices last week.
New offers are due mid-October in the spot market to deliver 800,000lbs U3O8 to one utility next year, but industry consultant TradeTech has lowered its weekly spot price indicator by US25c to US$37.00/lb.
TradeTech’s term price indicators remain unchanged at US$40.00/lb (mid) and US$44.00/lb (long).
Canada’s Cameco and France’s AREVA celebrated a milestone this week as the Cigar Lake uranium mine and McLean Lake mill commenced production. Back before the speculative spot uranium bubble burst in 2007, before the GFC and well before Fukushima, the start-up of Cigar Lake was expected by analysts to affect a turning point for the uranium price given the mine was to be the largest in the world. But then bad weather caused the mine to flood.
Even with Cigar Lake supply out of the equation, the spot uranium market managed to bubble and burst on its own. In 2008 commodity prices in general suffered a GFC-driven collapse and in 2011 Japan suffered its earthquake and tsunami. In 2007 the spot uranium price peaked at just under US$140/lb. It’s now a different world into which Cigar Lake will provide potentially substantial supply.
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