Commodities | Sep 02 2014
By Greg Peel
Industry consultant TradeTech’s spot uranium price indicator rose again last week, by another US75c to US$32.00/lb. However while consecutive weeks of price rises are encouraging, price volatility is reflecting a lack of liquidity amidst a deal of market uncertainty.
As the week closed out, the threat of further Western sanctions against Russia intensified as tensions in Ukraine heightened. Sanctions to date have not included any restriction on global uranium trade, but the market assumes that if trade sanctions continue to be upgraded, uranium must soon come into the mix.
The battle between US uranium producers and the US Department of Energy continues to rage, as a result of the DOE’s recent decision to release uranium inventories into a fragile market. Last week the industry body representing US producers lobbied the DOE to be included in the transfer process and for a limit on further sales and/or transfers.
And just to add the demand-supply uncertainty mix, Canadian uranium giant Cameco last week issued a lockout notice against workers at its McArthur River mine and Key Lake mill due to strikes at both sites.
The result of all of the above is uncertainty, with a bias towards higher prices on the risk of supply disruptions, and this is leading to a broad range of transaction prices being booked, often simultaneously, as participants scramble to deal. Disparity is further exacerbated by variations in delivery location and time and uranium form and origin, TradeTech notes.
Seven transactions totalling 700,000lbs of U3O8 equivalent were concluded in the spot market last week, as both utilities and intermediaries vied for supply. For the month of August, 4mlbs of U3O8 equivalent changed hands, up from 3.1mlbs in July, and TradeTech’s closing price of US$32.00/lb represents a $3.50/lb rise over the end-July price.
While only one term market transaction was reported in August, demand increased in the form of several supply tenders being issued by utilities for delivery in 2015-21. Outside of formal requests, off-market supply discussions were also noted. While there is no lack of producers and intermediaries lining up to pursue new sales opportunities, the rising spot price has affected a flow-through to the term market.
TradeTech has lifted its mid-term price indicator to US$34.50/lb from US$31.00/lb as a result. The consultant’s long term price indicator remains unchanged at US$44.00/lb.
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