Uranium Spot Price Settles At US$68.75 P/Lb But Seen As A Short Term Market Pullback

Published on Thursday February 24 2011

Very likely we shall see this recent decline within the Uranium Spot Market as a temporary pullback. On analyzing the Chart below one can clearly see a price convergence almost touching the Bottom Bolinger, in addition to the rapid decline of the RSI to 41

*RSI Above 70 Overbought/Below 30 Oversold

Therefore I would strongly suggest a bounce from this level.

 
This Weeks Market Wrap

After a stellar start to the year, the uranium spot market took a major step backward last week. Ux Consulting said that the price fell US$3.50 a pound to US$68.75, while rival TradeTech said it was down US$4.25 a pound to US$68.50.

Either way, it is the worst one-week price drop since the financial crisis in 2008. But according to TD Newcrest analyst Greg Barnes, it is not a huge concern.


TradeTech said there was a “non-traditional” seller in the market offering 800,000 pounds of material. Mr. Barnes wrote that he understands the seller is Chinese. The Chinese want uranium to be processed in China itself, and the material that was sold was effectively “stranded” at a Western converter, Mr. Barnes said.

“Rather than have the uranium concentrate converted in the West, the Chinese sold it in favour of material that could be imported into China as uranium concentrate and processed domestically,” he wrote.
He does not think that the Chinese have suddenly taken a bearish view of the market. Rather, he believes the sale was more of “an adjustment of inventory positions.”
“It appears that once the Chinese material cleared the market, buying interest returned at the new, lower level,” he wrote.
The uranium spot market has been very busy this year. 

Ux Consulting reported that the beginning of 2011 has been the strongest start to a year since 2005. There have been 53 transactions covering nine million pounds of uranium.

Australia Can No Longer Stay A Lone Nuclear Denier

Published on Monday January 24 2011

Last May, at a United Nations conference in New York, the veteran Japanese diplomat and director-general of the International Atomic Energy Agency, Yukiya Amano, glowingly endorsed civilian nuclear power.

He said, "More than 60 countries are now considering the introduction of nuclear power to generate electricity. It is expected that between 10 and 25 new countries will bring their first nuclear plants online by 2030."

Nuclear power "must be accessible not only for developed countries but also for developing countries", he said.

Japan has 54 nuclear power stations, two more under construction and 12 planned. The nuclear share of its electricity generating capacity will increase from about 30per cent today to more than 41 per cent by 2017.

This in an Asian nation that has experienced the horrors of Hiroshima and Nagasaki and which is regularly tested by nature's destructive forces. When I visited Kyoto in 1997, my Japanese colleagues reminded me that the nation's 54 nuclear power stations averted emission of 287million tonnes of greenhouse gases a year. Relying on Australian uranium fuel, this "carbon offset" was then more than all of Australia's emissions.

I recently addressed the World Renewable Energy Summit in Kuala Lumpur. High on the agenda was nuclear power for Asia.

An official paper from Korea entitled A Green Nuclear Utopia reminded delegates that in Korea 20 nuclear reactors produced about 17,700MW of electricity, meeting about 40per cent of the country's needs. Six more were under construction and six more planned.

This would ensure that the nuclear share of electricity generation would be in excess of 60 per cent by 2030.

Korea is now capable of marketing its own nuclear plant design to the world. Its order book for the construction of four advanced pressurised water reactors for the United Arab Emirates represents a contract worth more than $US20billion ($A20.2 billion).

Operation of these plants over the next 60 years is also worth about $A20.2billion. By 2050, the Korea Electric Power Corporation expects to have contracts worth more than $A506 billion.

China now contributes almost a quarter of the world's CO2 emissions.

Its volume of emissions over the past 10 years is greater than that of Brazil, Germany, France, Canada, Spain, Britain, Australia and Italy combined. 

China's energy policy is based on a 74per cent dependence on coal in 2010. By 2030, it is planned to reduce this to 50per cent, mainly by use of nuclear power. This will mean increasing the present nuclear installed capacity of 9000MW electric to about 190,000MW(e). Australia, in a similar bondage to the hydrocarbon industry, must learn from China's vision. It should start by introducing at least 5000MW(e) of nuclear power by 2020 and adopt a fixed carbon tax of between $10 and $20 over the next decade. Only in this way can we meet our United Nations emission reduction obligations.

In India 20 nuclear power plants supply more than 5per cent of its electricity. Four more reactors are being built, and the energy policy seeks at least 20 more by 2030.

A 2008 nuclear cooperation agreement with the US raises the possibility of foreign involvement in projects to generate as much as 63,000MW(e) of nuclear power by 2030.

Vietnam has firm plans for 15,000MW(e) of nuclear power by 2030. Indonesia is budgeting $A8.09 billion for four plants totalling 6,000MW(e) by 2025. The Philippines plans to rehabilitate an established but mothballed plant of 620MW(e) at a cost of about $A1.09billion.

Thailand plans to build at least 4000MW(e) of nuclear power commencing in 2014. Malaysia, which now produces almost two- thirds of its electricity from natural gas, has budgeted $A7.08 billion to build a large nuclear power plant by 2023.

As Asia "goes nuclear"  the new years's challenge for the Australian Government's Climate Change Committee is to tackle the problem of global warming with sound technology and informed realism.

This means re-examining and rejecting the pseudo-scientific and political attraction of "clean coal" and the semantically seductive utopian appeal of the costly "renewables".

Above all it means that the Australian Government must soon accept and endorse a now globally proven principle that at the heart of any successful emissions abatement project is the deployment of safe, secure and cost-effective nuclear power.

In Australia's case, an 80per cent historical base-load energy reliance on fossil fuels and chemical combustion must be replaced by the superb nano-technology of nuclear fission.

Recent polling clearly indicates that support for nuclear power in the Australian community is growing dramatically. Support for the technology is also beginning to emerge from both sides of Federal Parliament and from the offices of state premiers. Australia, the home of the world's nuclear fuels, can no longer sustain an appalling clean energy policy which makes it the sole "nuclear denier" among the planet's top 25 economies.

Professor Leslie Kemeny, a consulting nuclear scientist and engineer, is the Australian foundation member of the International Nuclear Energy Academy.

China Strengthens 2011 Rare Earths Regulation

The Ministry of Land and Resources has designated 11 rare earth mining blocks in Jiangxi as national planning centres

(Beijing) – China has drawn-up national planning regions for rare earth and iron mines to strengthen government regulation over the development of the metals.

According to the Ministry of Land and Resources, the national planning regions are comprised of 11 rare earth mining blocks covering 2,534 square meters in Ganzhou, Jiangxi Province. It also includes 466.94 square meters of vanadium titano-magnetite mining areas in western Panzhihua in Sichuan Province.

Since 2010, the Chinese government has accelerated the consolidation of the country's rare earth resources. According to a plan set by the Ministry of Industry and Information Technology, China will reduce the number of rare earth refining companies to 20 from the current number of more than 100 by 2015.

The Ministry of Commerce set quotas for 2011's first batch of rare earth exports at 14,446 metric tons on December 28, a 35 percent decline from the same period last year.

China accounts for more than 90 percent of the world's supply of rare earths, elements essential for high-tech electronics and electric vehicles.

China's Growing Appetite For Uranium

Published on Thursday December 09 2010

Is there any metal or, indeed, commodity in which China is not making the running — where China’s rising demand is not creating a wholly new dynamic in the global supply market? After some thought, one might have ventured uranium, that metal long dependent on the established generating markets of the old order – Russia, France, Japan, the US and, more recently, South Korea. But apparently even the uranium market is rapidly changing. According to an FT article, China is aiming to generate 5 percent of its electricity from nuclear power by 2020, in the process quadrupling its uranium consumption to 50 million-60 million pounds a year, according to UxC forecasts.

That compares with annual global demand of about 190 million pounds today and has seen the Chinese embark on an ambitious and aggressive buying spree at prices some 30 percent over current spot and twice spot prices of a year ago, tying up long-term supply offtake agreements and joint ventures. With minimal domestic production, just 2 million pounds this year, China’s imports have been equivalent to 20-25 percent of global uranium consumption and yet reactor building is still in its early stages with 23 reactors under construction but 120 planned, according to another article.

Ralph Profiti, analyst at Credit Suisse in Toronto, believes China is getting ahead of other consumers and, as with copper and non-ferrous metals, is building up a strategic stockpile before the Americans, Japan or Korea need to do their restocking.

If that is so, the US is particularly vulnerable. The country has over 100 nuclear reactors generating nearly 20 percent of the country’s electrical energy, but the US imports over 80 percent of its uranium supply. If uranium supply goes the way of other commodities, the US could increasingly be a hostage to the fortunes of an increasingly limited supply base as spot prices are driven higher and sources are tied up under long-term supply agreements. Which may explain why US authorities were so willing to pass approval for a Russian state-owned mining company, ARMZ, part of Rosatom power group, to control up to half of US uranium output by the middle of the decade.  The FT this week reported ARMZ has been approved by the Committee on Foreign Investment in the US, the government agency that vets foreign takeovers of US companies for possible national security implications. In November, the US Nuclear Regulatory Commission, which controls the ownership and operation of nuclear power facilities, also gave their go-ahead for ARMZ to take a 51 percent stake in Uranium One. The firm owns resources in Wyoming and plans under ARMZ’s control to ramp up production to between 2 and 4 million pounds by 2015 against a total US production today of about 4 million pounds.

Interestingly, the changing supply landscape has not escaped the investment community. BlackRock, said to be one of the largest investors in commodities, is said to be bullish on uranium, and an exchange-traded fund launched by Global X Funds has increased its holdings to $70 million in just three weeks since launch.

Click Image To Access Uranium Stocks Australia

Visit my other site Australian Uranium Investing

BY 2015 WE COULD SEE A NEW REACTOR COMING ONLINE EVERY 5 DAYS

Over the past three months, I've written frequently about China's incredible appetite for fuels like Natural Gas, Coal & Oil. If you're an investor or a trader, this is one of the "must follow" trends for the next decade.

Today, I encourage you to throw another fuel source onto the watch list... uranium. China is making big ripples in this commodity market as well. Here's why...

To meet its growing electricity demand, China plans to build 60 new nuclear reactors within the next 10 years. China's high-growth cousin, India, needs 40 new reactors in the next 20 years. That would increase the number of nuclear Power Plants in the world by 23%.This new Asian nuclear boom is expected to be the largest period of nuclear power growth since OPEC's oil embargo. At its peak, back in the 1980s, the nuclear industry started up a new reactor every 15 days. By 2015, we could see a new reactor coming online every five days.Both China and India understand the implications of that growth. According to Bloomberg, both countries are stockpiling the fuel. China could purchase more than twice as much uranium as it will use this year. The proposed reactors in China alone could consume more than 30% of the uranium mined today. That's why the country signed a 10-year, 10,000-ton deal with giant uranium miner Cameco.

Looking at the past 10 years in uranium, it's easy to see why China is stockpiling.

Uranium enjoyed a huge rise from 2002 to 2007. This rise attracted a tremendous amount of speculation, which ended badly when it fell from $140 per pound to around $40 per pound. This is a "blown-out" commodity that should get contrarians interested.

Here's another reason to be interested: While we have an impending explosion of demand from Asia, the industry's best mine hasn't opened due to calamitous problems, which I told you back in Nov, 2006.According to RBC Capital Markets, we will see the price of uranium rise 32% next year. That's the largest growth since 2006, when uranium soared. One RBC Analyst put a target of $56.25 per pound for 2010 and $60 per pound by 2015.And, of course, the last Bull Market in uranium saw a 277% gain in just 18 months. I'm not suggesting we'll see those types of gains soon. Blown-out markets tend to move sideways for a long time. But hoarding from India and China should keep a price floor of around $40 per pound under uranium.

I suggest watching this trend and waiting for a bit of price strength to assert itself. I want to see the train pick up some momentum before getting on board. The 200-day moving average of uranium prices is a good benchmark here. That's currently around $42.50 per pound. If uranium can cross over that line, it will be time to consider buying a big miner like Cameco, a uranium-holding company like Uranium Participation Corp, or some small uranium exploration companies.

Like most commodities, this trend depends on when Chinese buying starts moving prices higher. Keep it on your watch list and you'll be ready to buy when the trend begins.

Matt Badiali, Growth Stock Wire

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