Uranium Market Buyers Interest Returning

Published on Wednesday November 09 2011 (AEST)

Uranium industry consultant TradeTech closed its indicative spot uranium price at US$51.75/lb for the month of October. That's down US25c from the previous weekly spot price and also US25c down from the end-September closing price. And that about sums up the uranium market over the past couple of months ? a whole lot of not much.

October proved a very quiet month in the market, with 18 transactions completed for a total of only 2.2mlbs, down from 4.2mlbs in September. All month the spot price fluctuated in a range of less than US$2.00/lb. 

The lack of action is largely reflective of a stalemate between buyers and sellers, in which the buyers have not been all that keen, but sellers have not been prepared to lower prices to settle deals. It still appears US$50/lb is a rough line in the sand.

Also complicating matters have been differences in product demand (U3O8 and UF6) and differences in location of delivery requests across the globe, all of which underlines the fact there is no "real" global spot price for "uranium", and that's why TradeTech offers only an indicative price based on its market observations.

The industry remains unsure about levels of Japanese stockpiles no longer required, about ongoing US government plans to convert tailings stockpiles into useable product, and about the world's intentions from here with respect to nuclear energy, despite the Fukushima event now being eight months in the past. 

On the other hand however, the market has also been able to note ongoing corporate interest in uranium mining, most recently exhibited by rival bids for Canadian miner/explorer Hathor from industry heavyweights Cameco and Rio Tinto .

The good news is that a primary producer entered the market last week seeking 900,000lbs of U3O8 split between four different points of delivery. When a producer is buying spot uranium it usually implies a contract shortfall through lost production. TradeTech further notes several utilities ? the real end-users of uranium ? are contemplating entering the market for product in coming weeks.

The bad news is that the insignificant spot price movements of the last few months are an indication of sellers unwilling to sell too low, rather than a lack of sellers. Thus if some decent bids do begin to hit the market, TradeTech suspects they may be jumped on.

TradeTech settled its indicative spot price for last week at US$52.25/lb which is up US25c from the week before. Indicative term prices remain at US$55/lb (medium) and US$63/lb (long). 

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's Energy Resources (ERA) Suspends Uranium Processing " 12 Week Stoppage "

Published on Friday January 28 2011

SYDNEY Jan 28 (Reuters) - Energy Resources Australia has suspended uranium processing at its Ranger mine in Australia's Northern Territoy as a precautionary measure during the region's annual wet season, the company said.

The 68 percent-owned subsidiary of Rio Tinto said the suspension was likely to last 12 weeks.

"The La Niña weather pattern, which has brought extensive flooding to the eastern states of Australia, has also brought significantly higher than average rainfall to Ranger mine since October 2010," the company said.

As a consequence of the suspension, ERA said it sees 2011 production of uranium oxide at this stage to be at a similar reduced level to 2010, when it produced 3,793 tonnes. 

 Readers Please Note!

I would like to also take special note that this may very well put upward pressure on the current Uranium Spot Market

During 2010, Energy Resources Ranger Mine currently supplied  approximately 8.8% of World supplies and is rated as the worlds Second largest Uranium producing Mine behind Cameco's McArthur River.

Uranium Spot Hits 52 Week High $62.25P/Lb

Published on Thursday December 16 2010
 

UxC U3O8 Spot US $62.25
UxC U3O8 Mid Term US $62.00
UxC U3O8 Long Term US $65.00


Weekly Spot Ux U3O8 Price
as of December 16, 2010

US$62.25 P/Lb [+2.25]
Can$62.85 P/Lb
Aus$62.49P/Lb

TradeTech Uranium Spot Price Reaches US$57.50

Published on Tuesday Nov 9 2010

Note** Since Posting Uranium Spot Price has since risen to US$58.50.00 P/Lb

*** Suppliers expect prices to continue climbing and are under no pressure to sell, which has made spot uranium supplies extremely thin,” TradeTech President Treva E. Klingbiel said ***

TradeTech’s uranium spot price rose dramatically last week, soaring to a record two-year high of US$57.50 per pound uranium oxide (U3O8) on November 5, as buyers from a variety of market segments remain active in the uranium spot market.

The steep price rise represented more than a 10 percent increase compared to TradeTech’s October 31 Exchange Value(1) of $52 per pound U3O8. “While the level of spot market demand is primarily discretionary, it is exceptionally high, with buyers including utilities, traders, and producers,” said TradeTech President Treva E. Klingbiel. In addition, the recent rise in uranium prices has attracted the attention of investors and speculators, with hedge funds venturing back into the market, TradeTech noted in its November 5 "Nuclear Market Review."

The uranium spot price gained strength throughout the past several weeks, driven largely by utilities seeking offers for spot, mid- and long-term deliveries. This increase in demand has encouraged sellers and has led to steadily higher prices in offers and transactions. 

“Suppliers expect prices to continue climbing and are under no pressure to sell, which has made spot uranium supplies extremely thin,” Klingbiel said. 

Utility and producer demand is expected to remain strong throughout November and TradeTech expects uranium spot market prices to remain firm or increase slightly.

Visit my other site Australian Uranium Investing

Bullish Signs in Uranium

Published on Saturday Nov 6 2010

Note** Since Posting Uranium Spot Price has since risen to US$56.00 P/Lb

UxC Price Update: “The UxC spot price is up US$1.50/lb to US$53.50/lb for the week (from US$52.00/lb). The long-term price remains unchanged at US$62/lb. Nine deals were reported during the week totaling 1.2Mln’lbs U3O8. Year-to-date, spot market volume has totaled 41.6 million pounds (218 deals) compared to 43.7 million pounds (187 deals) in 2009 and 35.1 million pounds (172 deals) in 2008. (source: Ux Weekly – Nov. 1, 2010).”

UxC Market Review: “Spot transactions for the month of October have accelerated with a total of 41 transactions vs the monthly run-rate in 2010 of 20.7. We remain supportive that prices will resume an upward trajectory from current levels and uranium equities remain inexpensive relative to historical valuation ranges. Medium-term, we believe spot prices will converge on the current long-term price (currently US$62/lb) and eventually move even higher as under investment in uranium production and lack of new supply, combined with low demand volatility and strategic inventory build serves to provide a fundamental underpinning. (source: Ux Weekly – Nov. 1, 2010).

Bullish Signs for Uranium. “There has been a resurgence of bullish signs for the uranium market and price in past few weeks. Production grade issues at Energy Resources of Australia’s Ranger mine resulting in lower production; and political and security risks in Niger, possibly impacting the start of the AREVA’s Imouraren project have increased supply risk. For 2010, we expect to see a net decrease in uranium production outside of Kazakhstan, signaling a tightening in supply relative to our previous forecasts. There is continued dependence on Kazakhstan for production expansion, but as a reminder, we estimate uranium prices need to be US$60+/lb for economic viability of some expansions.”

Further bullish signs for uranium include 

1/ U.S. dollar weakness vs uranium producer currencies (Australian Dollar, Canadian Dollar)

2/ Increasing long-term prices, which incentivizes utilities into mid-term deals where deal terms are more flexible; and 

3/ we are approaching the end of the HEU deal.”

Areva to sign uranium deal with China. “According to Les Echos, a French financial newspaper, AREVA may sign a US$3Bln deal this week with China Guangdong Nuclear Power Corp (CGNPC) to supply 20,000 tonnes of uranium over 10 years. Further discussions are also expected between AREVA, CGNPC and China National Nuclear Corporation  on delivery of two additional EPR nuclear reactors into China. China currently has 13 nuclear reactors in operation (11GWe), with a target of 40 gigawatts by 2020. There are 25 reactors under construction in China (21 French reactors).

Pricing update and market outlook provided by Ux Consulting Co. LLC

Visit my other site Australian Uranium Investing

Uranium Spot Price News Update Oct 19-2010

Published on Tuesday Oct 19 2010

 

Sellers are responding by raising their offer prices and TradeTech has similarly lifted its Spot Price Indicator by US50c to US$48.50/lb.

Uranium market activity is continuing to pick up as uranium market consultant TradeTech notes the spot market saw eight new transactions and some new demand entering the market over the past seven days.

The transactions totalled almost 800,000 pounds of uranium, the buying coming from utilities, producers and intermediaries. Deals completed during the week included a US utility looking for 200,000 pounds of material selecting winning suppliers for a portion of its needs.

Prices for deals completed during the week spanned a broad range, this depending on delivery date and location. As TradeTech notes, transactions involving delivery next year or in Europe were concluded at higher prices than deliveries in North America and before year-end.

In terms of new demand, one US utility entered the market seeing 180,000 pounds of uranium with offers due October 25th, while another utility is looking for 400,00 pounds of material for spot delivery and a further 650,000 pounds for delivery next year.

This increase in spot activity, along with significant demand in the mid to long-term sector, such as one utility seeking up to 975,000 pounds of material, is putting upward pressure on prices.

There are no changes to TradeTech's mid-term indicative price of US$50/lb or its long-term price indicator of US$62/lb.

Australia's Energy Resources Cuts Uranium Output Target, Will Buy Spot

Published on Tuesday Oct 13 2010

Energy Resources of Australia (ERA.ASX) cut its full-year uranium oxide output target by up to 800 tonnes after third-quarter output dropped 35 percent and said it will need to buy material to meet sales obligations.

* ERA blames less rich ores for the drop

* Says 2010 output target cut by up to 800 tonnes

* Braces for adverse impact on 2010 earnings

The news, which sent ERA shares down more than 6 percent, is expected to exacerbate an already-tight world market for uranium oxide, used in nuclear power generation.

"The shortfall represents about 1 percent of world supply in 2010, so it's not the end of the world, but could have some impact on the uranium price," Warwick Grigor, a sector analyst and chairman of BGF Equities in Sydney.

"Overall, ERA is coming in 20 percent under their capacity, and that's significant," Grigor said.

ERA, which in 2009 accounted for nearly 10 percent of world uranium oxide output, downgraded its full-year output target to 3,900 tonnes, from between 4,300 and 4,700 tonnes.

It also said it would have to go to the market to meet 2010 sales commitments of around 5,000 tonnes.

By 0455 GMT shares in ERA, which is 68 percent owned by Rio Tinto , were down 6.4 percent at A$13.53.

TIGHT URANIUM MARKET

The limited growth in mined supply is a legacy of the 1990s, when plunging prices froze most exploration and development.

After falling as far as $7 a pound on spot markets in 2000, prices rebounded to $136 in 2007 -- spot uranium UX-U3O8-SPT is now at $48 -- as countries searching for an alternative to greenhouse gas-producing power sources such as coal have re-embraced nuclear power.

The Australian Bureau of Agricultural and Resource Economics forecasts global uranium production in 2010 will rise 5 percent to 60,190 tonnes, mainly because of higher output from Kazakhstan and parts of Africa.

ERA said its outside purchases were expected "to adversely impact 2010 earnings as the small price margin associated with the sale of the purchased material is more than offset by the ongoing costs of operation."

Its third quarter output of 911 tonnes was 10 percent higher than the previous quarter due to mining of richer ores, though the uranium grading still remains significantly below 2009 levels, the company said. (

Visit my other site Australian Uranium Investing

Trade Tech Uranium Spot Price Update

Published on Tuesday Oct 5 2010


Uranium Spot Price Update
Uranium prices posted a modest gain last week, industry analyst TradeTech lifting its spot price indicator for the week ending October 1 by US$0.75 to US$47.50. The increase reflects multiple producers entering the market actively seeking uranium for immediate delivery, which one assumes would be to make up contract short-falls.

One utility also entered the market, seeking around 400,000 pounds of uranium for spot deliver and a further 650,000 pounds for delivery next year according to TradeTech. Elsewhere, the group notes two buyers are still evaluating offers for up to one million pounds of material.

In the term uranium market TradeTech notes there has been no new demand or transactions since the end of last month. One US utility is assessing offers for delivery of up to 2.2 million pounds of uranium between 2013-2019, while another US utility is evaluating offers for 520,000 pounds for delivery in 2011 and 2012 and up to 1.1 million pounds per year in 2015 and beyond.

There was one September transaction in the term uranium market, a utility selecting a preferred supplier for delivery of around two million pounds of material to be delivered across a six-year period.

TradeTech's new spot price indicator compared to a price of US$46.75 the previous week and is an increase of US$1.25 from the level at August 31. Prices were volatile through September as earlier in the month TradeTech's spot price had been as high as US$48.00 per pound.

For the month a total of 20 transactions were recorded for a total of 3.1 million pounds equivalent of uranium, while year-to-date volume now stands at 32.6 million pounds uranium equivalent.

Falling prices in recent months attracted new buyers into the market, though TradeTech notes the impact of this increased buying interest was offset by new supplies hitting the market.

Factoring in September's market activity sees no change to TradeTech's medium-term price indicator of US$50 per pound. The group has lifted its long-term price indicator to US$62 per pound from US$60 per pound previously. The increase to the long-term price indicator reflects both increasing demand for material and recent offers and transactions.

Uranium Spot Prices at 10-Month High

Uranium is drawing interest from investors including hedge funds after prices for the nuclear fuel climbed to the highest level in more than 10 months, according to Ux Consulting Co.

Uranium-oxide concentrate for immediate delivery remained at $48 a pound for a third week, Roswell, Georgia-based UxC said yesterday in a report. Prices are up 19 percent from this year’s low in March.

Hedge funds also were in the uranium market six years ago, UxC’s President, Jeff Combs, said yesterday by phone.

At that time, prices of the radioactive element were starting a surge in which they would jump more than fivefold in the three years through 2006. Uranium almost doubled again in 2007, reaching a record $136 a pound in June of that year.

“Interest from hedge funds and investors has started to re-emerge,” Combs said. “We did see it in 2004. Investors and hedge funds were getting interested, and they were ahead of the curve then. The question now is, is this the next up leg in the market?”

Price gains sped up after 2004 as governments around the world promoted nuclear energy in a bid to reduce dependence on fossil-fuel imports and curb emissions. Increased Chinese and Indian nuclear-power usage will help to maintain “strong” fuel demand, Energy Resources of Australia Ltd., the uranium producer controlled by Rio Tinto Group, said in May of this year.

Better Supply

The main difference compared with six years ago is improved supply of uranium, according to Combs. Output more than quadrupled in Kazakhstan, the world’s biggest producer, from 2003 to last year, according to figures from the World Nuclear Association. Production was little changed in 2009 in second- ranking Canada compared with 2003, WNA figures show.

“A key question is what the Kazakhs will do with respect to production in the future,” Combs said.

Kazatomprom, the state-owned Kazakh nuclear company, aims to raise uranium production by 29 percent to about 18,000 metric tons this year, Vice President Galimzan Pirmatov said on Sept. 16. Planned expansion may boost annual output to 25,000 tons by 2016, he said.

Cameco Buys Uranium as Investment to Capitalize on Price Slump

Published on Thursday Sept 16 2010

Cameco Corp., the world’s second- largest producer of uranium, bought the nuclear fuel on the immediate-delivery market this year as an investment to take advantage of a price drop.

Uranium-oxide concentrate fell to a 2010 low of $40.50 a pound in the spot market in the week through March 1, a drop of 9 percent from last year’s close, according to data from Roswell, Georgia-based Ux Consulting. Prices have since climbed to $48, the highest level in more than 10 months.

“There were a number of times this year when we thought uranium was a good investment to buy, and that is what we did,” George Assie, Cameco’s senior vice-president of marketing and business development, said in an interview in London yesterday. “At times we’ll see material in the market that we think is very attractively priced, so we will purchase.”

Price gains in recent months reflect uranium’s positive fundamentals, Assie said. Fifty-nine nuclear reactors are being built to add to the 440 operating globally, data from the World Nuclear Association shows. An accord under which uranium from dismantled Russian weapons is turned into fuel for U.S. nuclear power plants is scheduled to expire in 2013.

The end of the U.S.-Russian Highly Enriched Uranium Purchase Agreement will shrink supply of the metal, according to Assie. Saskatoon, Saskatchewan-based Cameco has yet to “rule out” buying more uranium on the spot market, he said.

Production Goal

“We think the price is on an upward trend,” Assie said. “We have a fair degree of confidence we can place it into contracts at a higher price,” he said of spot uranium purchased by the company.

Cameco markets between 6 million and 7 million pounds of uranium a year as part of the HEU Purchase Agreement, which will be replaced by an increase in its own output, according to Assie. The company aims to double last year’s production of 21 million pounds by 2018, he said.

The Cigar Lake joint venture being developed in Canada will be key to reaching the production goal, Assie said. The site contains the world’s largest undeveloped high-grade uranium deposit, Cameco’s website shows. Paris-based Areva SA, Idemitsu Canada Resources Ltd. and Tepco Resources Inc. are the company’s partners.

Production at the venture is expected to start in the middle of 2013, rising to full output of 18 million pounds in 2017, according to Assie. Cameco’s share would be 9 million pounds, he said.

Purchases by Banks

Investment banks also were buyers of spot uranium this year, according to the executive.

“The banks will certainly step in when they see prices are soft,” Assie said. “On occasion when we bought material, it has turned out it has been them on the other side of the transaction.”

Uranium Prices To Hit $100.00P/Lb Next Year

Published on Saturday Sept 11 2010.

Stock market analyst Fat Prophets says uranium prices are likely to double by August 2011.

Fat Prophets calls a 12-month price of uranium of US$100 per pound, and US$60 by December 2010. The TradeTech uranium spot price was $46.75 per pound on 3 September.

Fat Prophets’ managing director, Greg Smith says the price rise will be driven by China's ongoing adoption of reactors and the run up to what the company believes to be a massive global demand for nuclear power.

The spot uranium market has been extremely active since the end of August, with eight transactions concluded during the first three days of September, according to TradeTech.

“With over 30 million pounds U3O8 already sold in the spot market this year, many sellers have met their sales goals for 2010 and spot supply available for immediate delivery is relatively thin,” TradeTech said 3 September.

Adding, ”As a result, several buyers are extending their time horizon for delivery into the first quarter of 2011.”