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Spot Uranium Bounces

Commodities | Mar 29 2011

By Greg Peel

Last week's Uranium Report had the weekly spot uranium price indicator determined by industry consultant TradeTech falling from US$67.75 to US$53.00/lb in the previous week's trade. The Monday of that week experienced the first market response to the Japanese earthquake and nuclear disaster.

Uranium initially changed hands as low as US$50/lb, TradeTech noted, but prices this low brought in the buyers in a hurry. Utilities and producers covering contracts were quick to pounce on the desperation of speculative sellers to bail out of an uncertain market. Hence the weekly indicative price settled at US$53.00 after sizeable turnover of 3.6mlbs of U3O8 equivalent in 21 separate transactions.

The inference here was that despite the pall cast over the global nuclear energy business by the Fukushima disaster, there were still industry buyers quite happy to cover stockpile requirements and contract shortfalls at a price some 30% below the earlier peak this year of US$73/lb. Analysts have long suggested the uranium spot market is supported at the US$50 mark.

Last week it appeared as though the situation at Fukushima was coming under control, albeit the weekend's developments indicate we're by no means out of the woods yet. News that power had been restored to the plant encouraged further buying last week, but eight transactions totalling 1.1mlbs show that initial enthusiasm on the buy-side had abated somewhat. The sellers last week were still speculators getting out, TradeTech notes, but there was also some interest from speculators getting in at low prices along with more interest from producers. Utilities were missing.

The end result on a week-to-week indicative price basis was a rise of US$7.00 to US$60.00/lb on TradeTech's indication.

What happens next is still anyone's guess, although it appears US$50/lb should hold barring some major catastrophe. As for upside from here, well it is likely a waiting game for the latest news from Japan.

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