Weekly Reports | Dec 05 2017
Having broken out of a long period in the doldrums, the spot uranium price is now experiencing heightened volatility.
By Greg Peel
Having finally broken out of a five month period of being unable to move away meaningfully from the US$20/lb mark, the spot uranium price rose to US$24.75/lb before falling back to US$23.60/lb in the Thanksgiving-interrupted week. Last week saw a further fall of -US35c to US$23.25/lb on industry consultant TradeTech’s weekly spot price indicator.
Volatility reigned. The spot price fell as low as US$22.50/lb early in the week before rebounding sharply, and then running smack into a big sell order at November month-end. When the dust settled, 1.6mlbs of U3O8 equivalent had changed hands in 14 transactions, which is quite a busy week.
But the feature of the week was the complete absence of end-users in the market. Having curtailed uneconomic production, many producers are now choosing to buy in uranium at prices lower than their own cost of production to satisfy legacy delivery contracts. Hence producers appeared as both buyers and sellers last week, along with intermediaries and speculators. Utilities were not seen.
Which probably explains the volatility.
In demand-side news, Bangladesh became only the third new member of the nuclear power club in thirty years last week as the country commenced construction of its first reactor. Bangladesh follows Belarus in 2013 and the UAE in 2012.
Volume
If the spot price break-out last month has sparked volatility, it has done so on the greatest number of monthly transactions ever posted since records began in 1996. March 2011 – the month of Fukushima – saw 45 transactions reported, TradeTech notes. This November, 64 transactions were reported, totalling 7.4mlbs U3O8 equivalent.
November’s volume represents 23% of total 2017 volume year to date.
In uranium term markets, seven transactions were reported in November totalling 4.1mlbs. After months of quietly sliding lower, TradeTech’s term price indicators have finally seen a monthly increase on the spot market bounce.
The consultant’s mid-term price indicator is up US$3.65 to US$28.00/lb and the long-term indicator is up US$1.00 to US$31.00/lb.
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