Uranium Expected to Climb Higher During February
February 2, 2007 By Julie Ickes
Buyers Show Willingness to Pay More for U3O8
After a six-week stalemate, the spot uranium price indicator renewed its upward climb, as witnessed by the weekly spot uranium price change announced by UxC on January 29th and by Trade Tech?s Nuclear Market Review in the magazine?s month-end report on January 31st. Both consulting services increased the uranium price indicator by $3 to US$75/pound U3O8 by month end.
TradeTech reported extremely low transaction volume for the first month of 2007. Only one spot transaction was reported ? a modest quantify of less than 5,000 pounds U3O8 equivalent. According to Nuclear Market Review editor Treva Klingbiel, ?The discretionary nature of about 50 percent of this demand has created an impasse between buyers and sellers. While some buyers have increased the price they are willing to pay, in an effort to solicit firm price offers, sellers remain entrenched in their position that prices will continue to rise in the future. As a result, a significant gap still exists between willing buyers and willing sellers.?
Many market participants took a breather after the record price rise in mid December. TradeTech Chief Executive Gene Clark told StockInterview, ?The large demand from discretionary buyers removed a strong ?must buy? component from the market and caused a sharp drop in January?s transaction volume. Thus, the gap that previously existed between buyers and sellers widened.? But Clark warned, ?We expect uranium prices to regain upward momentum in February.? Utilities may be paying higher prices for nuclear fuel as the year goes on.
By comparison, UF6 suppliers have shown a willingness to hold prices in order to try to conclude transactions. As a result, TradeTech?s UF6 price indicator held steady during January at $199.00 per kgU as UF6. UF6 is uranium hexafluoride, the chemical form of uranium used during the enrichment process. UF6 consists of one uranium atom combined with six fluorine atoms.
The spot UF6 conversion price fell in Europe during January, dropping below the North American price to $11.15 per KgU for the first time since these markets diverged in the year 2000. Sales of the conversion component of some UF6 inventory were to blame. Some swapped UF6 inventory for the currently more fungible U3O8.
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