Uranium Week: Too Many Sellers

Weekly Reports | May 16 2017

Utility interest emerged in the uranium spot market last week but was unable to satisfy all sellers, leading to a -5% price fall.

By Greg Peel

A cheer wet around the uranium spot market last week as a utility moved in with buying interest, just as has long been anticipated. But with sellers lined up and poised, not everyone was going to be satisfied.

Thus when news reached the utility had settled the deal, those missing out took their omission rather poorly. A scramble ensued, sending the spot price lower through the week to take industry consultant TradeTech’s weekly spot price indicator down -US$1.20 or -5.3% to US$21.25/lb. TradeTech reports seven transactions totalling 800,000lbs U3O8 equivalent.

The spot price has now fallen almost -20% from its previous peak of $26.50/lb in February. That peak followed a speculative rally from the prior multi-year low of $17.70/lb in December. All along the market has been expecting buying interest to emerge at lower prices. So far that emergence has been limited.

While some opportunistic buying has come into the market over past months, at the end of the day utilities remain well stocked.

Buying interest does, nevertheless, continue to enter the mid and long term delivery markets. Participants have been looking for this increasing interest to have a positive effect on prices and a flow-through to the spot market but this is just not playing out as hoped. Many a producer continues to sell product at below the cost of production.

TradeTech reports buying interest is expected to emerge in coming weeks, particularly for deliveries post-2020, as several utilities look to lock in low prices into the future.

Buying interest has been expected to emerge in coming weeks for months now.

Trade Tech’s term price indicators remain unchanged at US$27.00/lb (mid) and US$35.00/lb (long).
 

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