Uranium spot price sinks amid ‘disorderly exit’ Facebook | Twitter | Email | Instapaper
Peter Koven
Monday, Jul. 29, 2013
 Uranium concentrate, also known as yellowcake Daniel Acker/Bloomberg News
Over the last few years, the uranium spot price found support whenever it fell to US$40 a pound. But not this time.
Uranium has plunged 14% over the last two months, and now sits at US$34.50 a pound after dropping another US$1.50 last week. It’s the lowest level since 2006.
“It appears that by the end of last week, a disorderly exit from the spot market was underway,” TD Securities analyst Greg Barnes wrote in a note.
What’s going on? Mr. Barnes noted that the Fukushima disaster continues to be taking an enormous toll on the industry, with all by two of Japan’s 50 nuclear reactors offline. As a result, Japanese utilities have too much supply on hand and are apparently dumping it on the market.
Many experts have claimed that the big catalyst to get the market going again will be the reactor restarts in Japan. That is not happening, as prices are falling even though Japan is inching closer to restarts. Mr. Barnes said the restart process could be “a lot more protracted” than originally thought. He pointed out that there is still plenty of anti-nuclear sentiment across the country. Those anti-nuclear views are having an impact in other countries as well, including China.
He does not believe that uranium has much further to fall, but that does not mean a rebound is going to happen anytime soon.
“As is often the case in the small and opaque uranium market, the timing of a uranium price rebound is highly uncertain and possibly some way in the future,” he wrote.
It should be noted that the mid-term and long-term uranium prices are holding steady at US$43 a pound and US$57 a pound, respectively. These are the prices that really matter for uranium producers, since they sell the vast majority of their material in contracts. But Mr. Barnes believes there could be downward pressure on these prices in the months ahead as well.
Posted in: Trading Desk, Mining Tags: Uranium |
