Uranium Spot Prices Decline In Wake of Japan Crisis

Published on Tuesday June 28 2011 (AEST)

Uranium spot prices fell 0.5 percent as demand remained weak amid Japan’s nuclear crisis, Ux Consulting Co. said.

Uranium-oxide concentrate for immediate delivery was at $54.25 a pound in the seven days through June 27, Ux said in an e-mailed report today. That’s based on the most competitive offer tracked by the Roswell, Georgia-based company.

The spot price for the nuclear fuel, which has declined 18 percent since the week before a March 11 earthquake and tsunami damaged Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station, has fallen by $3.25 this month. The nuclear accident, the worst since Chernobyl in 1986, has seen Tokyo Electric attempt to bring damaged reactors under control using outside pumps, after cooling systems were knocked out.

“Buyers see no urgency to buy, as reflected by bids for delivery at the end of this year up only marginally from current levels,” Ux said. “The market is dominated by the aftershocks of Fukushima, specifically the reduction in demand spawned by that accident.”

Nuclear-power utilities buy the bulk of their uranium for processing into fuel from mining companies, with the contracts mostly extending beyond 12 months. The market for immediate delivery, or spot market, allows trading for delivery within a year and includes financial investors. The U.S. government also periodically conducts auctions to reduce stocks.

Germany, which relies on atomic energy for 23 percent of its supplies, may phase out plants as early as 2022, Georg Nuesslein, a lawmaker for Bavaria’s Christian Social Union party, said in May. Chancellor Angela Merkel ordered a halt to the country’s seven oldest reactors in the wake of the Fukushima crisis, removing more than 25 percent of its 20,700 megawatts of capacity, equivalent to the power needed to supply almost 21 million U.S. households.

“There is little reason to expect that the price will increase anytime soon,” Ux said. “The forward price curve is relatively flat, with bids out in the future a little higher than those for more immediate delivery. 

 Buyers are waiting for news out of Japan and Germany to see what may happen to any excess inventories associated with the nuclear programs in those countries.”