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Investors wary indeed, as uranium prices continue their free fall

Market sources are not optimistic the spot U3O8 price will rebound in the near future. “You’ll see more sales that need to be done by year end and there will be more pressure on the sales side,” one market analyst said. “It doesn’t look encouraging for people who think prices will rebound” by December — it’s wishful thinking,” he said.

There has been no firm support since spot U3O8 prices dropped below $40/lb in June, the analyst said. “Some producer will have to announce either a delay in a [uranium mining] startup or that a major project will shut down production. There’s nothing else out there that would bolster the market,” he said.

Uranium spot price weakens further in the wake of low-priced deal Washington (Platts) Jim Ostroff,   Sep 2013/303  The spot price of uranium has dropped by about $1 in the past week to come in at about $34/lb, as a trading company’s deal last week to sell material that level continued to depress prices, market analysts said in interviews Tuesday.

The last time U3O8 spot prices were below the current average was November 14, 2005, when price publisher Ux Consulting reported a weekly price of $33.95/lb. The company did not begin to publish a daily Broker Average Price until 2009. The BAP is based on information from Evolution Markets and Numerco.

“Spot uranium supply continues to outstrip demand even as discretionary and utility demand step forward to take advantage of declining prices,” price publisher TradeTech said in its weekly report Friday. It said “there is a delivery timing mismatch between buying interest and sellers,” with the “majority of buyers” interested in purchasing U3O8 for “delivery in 2014 and beyond.”

Prices, which were around $35/lb through early last week, began to slide at mid-week due to market chatter about a sale of several hundred thousand pounds of U3O8 by a trading company at about $34/lb, analysts said.

Ux, which posted a BAP of $34.81/lb early last week, reported a drop of 43 cents on Wednesday, to $34.38/lb and a further 25 cent drop to $34.13/lb on Thursday. Ux late Friday put the BAP at $34/lb, down 13 cents from Thursday.

Friday’s BAP bid-offer spread Friday was $33.75-$35.25/lb, with the bid unchanged and the offer down by 25 cents from Thursday. Ux did not publish daily prices Monday, or its weekly report, because of the US Labor Day holiday.

TradeTech, which also did not publish its daily spot price for U3O8 on Monday on Friday lowered its spot price by $1 to $34/lb. TradeTech reported Friday that seven transactions totaling 1.2 million lb U3O8 were concluded for the week that ended Friday.

Market sources are not optimistic the spot U3O8 price will rebound in the near future. “You’ll see more sales that need to be done by year end and there will be more pressure on the sales side,” one market analyst said. “It doesn’t look encouraging for people who think prices will rebound” by December — it’s wishful thinking,” he said.

There has been no firm support since spot U3O8 prices dropped below $40/lb in June, the analyst said. “Some producer will have to announce either a delay in a [uranium mining] startup or that a major project will shut down production. There’s nothing else out there that would bolster the market,” he said.

A second market analyst said a response to the current, relatively low spot U3O8 prices “will have to come from the supply side,” noting that “about 50% of uranium production is under water,” with the cost of production higher than spot prices.
The Platts NuclearFuel range for the week is $33.50-34.75/lb.sday, to $34.38/lb and a further 25 cent drop to $34.13/lb on Thursday. Ux late Friday put the BAP at $34/lb, down 13 cents from Thursday.

September 4, 2013 - Posted by Christina Macpherson | 2 WORLD, business and costs, Uranium