March 18, 2011-The massive earthquake and tsunami that struck Japan on March 11, 2011, and the subsequent crisis at the Fukushima Daiichi nuclear station rocked the uranium fuel market this week. The spot price for uranium fell sharply at the beginning of the week after news broke over the weekend about the severity of the conditions at the station. Several sellers immediately entered the market anxious about the impact of the accident. As the week progressed and the news about the condition of the reactors worsened, sellers wishing to dispose of material quickly were forced to offer significant discounts in order to complete a sale. A total of 21 transactions changed hands over the course of the week. Buyers were primarily utilities and uranium producers; sellers were traders and financial entities. These transactions have removed the most aggressively priced supply, and, as the week came to a close, there was not enough low-priced supply to meet unanticipated discretionary demand drawn into the market by low prices and new positive reports that electricity can be supplied to the Fukushima reactors now that a new transmission line has been connected from an off-site power system. As a result, spot uranium prices began to recover and TradeTech's Uranium Spot Price Indicator closed at $53.00 per pound U3O8, down $14.75 from last week's Indicator, but up $3.00 from the March 17 Daily Uranium Spot Price Indicator.
Going forward, the psychological effects of the accident at Fukushima are expected to result in a period of uncertainty in the market and the spot price for uranium will likely fluctuate based on news reports and the success of efforts to stabilize the reactors. Considering the apparent severity of the accident and the worldwide public reaction, a period of uncertainty and resulting price volatility is inevitable. Ultimately, if the actions of regulators in the aftermath of the accident result in additional plant delays or cancellations, both the spot and long-term uranium markets for uranium will be adversely affected.
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