Uranium Spot Prices Increase As Investors Re-Enter Market

Published on Wednesday August 03 2011 (AEST)

Uranium spot prices rose 1.5 percent, snapping several months of price declines, as Japan’s Fukushima crisis brought new investors into the market, boosting demand, Ux Consulting Co. said.

Uranium-oxide concentrate for immediate delivery was at $52.25 a pound in the seven days through yesterday compared with $51.50 the previous week, 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 has declined 21 percent since the week before a March 11 earthquake and tsunami damaged Tokyo Electric Power Co.’s Fukushima Dai-Ichi power station. The decline in prices is now attracting investors, Ux said.

“The spot market has rebounded somewhat as new buyers have appeared to take advantage of lower prices, clearing some material from the market,” Ux said. “While deals have taken place, they are generally for relatively small quantities, so it appears that neither buyers nor sellers are willing to commit large amounts at these price levels.”

Nuclear-power utilities buy the bulk of their uranium 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 buying and selling by financial investors.

Uranium prices, which rose to a record $136 a pound in 2007 before falling to about $40, started to rebound last year as China increased the use of nuclear power to curb emissions from burning coal. Even after Fukushima, the worst atomic accident since Chernobyl 25 years ago, nations such as China and India have recommitted to a nuclear energy future, which could bolster prices of the nuclear fuel in the longer term.

“Spot uranium market activity has remained at moderate levels over the past several weeks despite a number of participants being on travel or holiday,” Ux said. “To a large extent, the market appears to be stuck in a summer season, post- Fukushima funk. There has not been a lot of positive news to energize demand.”