once and for all: spot vs long term, page-6

Uranium Softens On Minimal Activity
FNArena News - December 15 2009

By Andrew Nelson

Last week was a quiet one on the spot uranium market, with very little in the way of activity reported. With questions still lingering about the timing of the US Department of Energy's (DOE) plans to release stock in to the market, both buyers and sellers remained reluctant to commit to any deals.

Global energy company USEC was expected to enter the market last week with some 520 thousand pounds of U3O8 equivalent that it was to receive from the DOE in payment for its clean-up efforts at the Portsmouth enrichment facility. However, ongoing negotiations between the company and the DOE meant the process was delayed, with USEC now expected to request firm bids from potential buyers next week.

The delay means that the delivery on the bids received by USEC has pushed out to January 2010 instead of the December 15 date that was previously expected. Industry consultant TradeTech notes that while the change to a January 2010 delivery may allow some additional buyers to bid on the material and thus encourage some higher bids, the overhang of this DOE material on the market is still exerting additional downward pressure on the price.

With both buyers and sellers reluctant to commit to purchases until this DOE material has cleared the market, the gap between willing buyers and willing sellers continued to widen last week. This saw the TradeTech U3O8 Weekly Spot Price Indicator slip marginally to US$44.50/lb from US$44.75/lb at the end of the previous week.

The market is also entering the traditional year-end slow down, which tends to see players close out their budgets and financial books for the year. Only three transactions were reported last week, totalling less than 500 thousand pounds U3O8 equivalent. TradeTech reports that all three deals involved transactions that were in negotiation from the previous week.

The term market was even quieter last week, with no transactions or new demand reported. As such, TradeTech's U3O8 Long-Term Price Indicator stayed put at US$60.00/lb.