Posts Tagged ‘future uranium prices’
According to Friday’s Nuclear Market Review (NMR), many market participants were left stunned by the recent record jump in the weekly spot uranium news today. The market has increasingly diverged between those who have U3O8 and those without. Utilities with existing supply contracts “are heaving a sigh of relief,” NMR editor Treva Klingbiel wrote. And those trying to find uranium in today’s climate “are forced to face the reality of a seller’s market,” she said.
Is there pity for one market participant, who is now scrambling for ‘very near term delivery’ of nearly 500 thousand pounds U3O8? Probably not. This buyer must compete with 7 others hoping to secure about 3.2 million pounds of U3O8 equivalent.
NMR reports, “Sellers remain reluctant to sell significant quantities today.” By waiting longer, sellers expect to get a higher price for the material they hold. After the previous week’s astonishing price jump, the spot uranium market “was exceptionally quiet,” according to Klingbiel. The spot uranium price indicator remained unchanged at US$113/pound. TradeTech posts changes in the weekly spot uranium price on the consulting service’s website, at http://www.uranium.info
Utility Pricing Climate
Utilities remain skeptical about the long-term pricing of uranium. This weekend’s Barron’ article, about the crisis nuclear utilities face, quotes Exelon Corp’s (EXC) Tom Malone and Entergy’s (ETR) Frank Rives. Both believe uranium pricing should ‘settle down.’ Malone quoted a long-term uranium price of $40/pound. Utilities accustomed to lower pricing levels and wishing for uranium’s return to a more advantageous price level for themselves, may be waiting for more than a few years. In conversations we had with TradeTech’s Gene Clark, equilibrium might not take place until 2017.
We provided TradeTech’s Uranium Price Forecast through 2008 in Chapter Two of our soon-to-be-released Uranium Outlook publication. Going out further, uranium production should not reach 230 million pounds U3O8 until about 2017. And there are many disturbing developments in numerous areas, which could substantially lower this production forecast. Foremost are the difficulties BHP Billiton (BHP) may have in transforming Olympic Dam into an open pit uranium mine.
Some utilities are again taking the wait-and-see attitude about higher uranium costs. This strategy has backfired over the past year because a number of countries planned to increase or add civilian nuclear power programs. Now the Arab Gulf States want nuclear energy, adding to the number of countries seeking to obtain uranium. “Everybody’s going for nuclear programs,” Jordan’s King Abdullah II told an Israeli newspaper.
Against the advice of some experts, we included a special section in our publication, “Investing in the Great Uranium Bull Market,” predicting a rise of civilian nuclear energy in the Middle East. Turkey plans three nuclear reactors, hoping to start construction later this year on the first one. After Russian President Putin visited Saudi Arabia in February, offering ‘nuclear aid,’ will U.S. utilities now also be forced to compete for Kazakh uranium against the Arab Gulf States? It appears global deals are being arranged on a country-to-country basis, and U.S. utilities are coming up short.