Disaster for uranium industry as uranium glut grows: fell US$1.00 to US$34.00/lb last week.
Japan’s nuclear energy intentions are the swing factor at present. … if Japan does not start turning back on more reactors, Japanese uranium stockpiles will continue to hit the market to pay for increased fossil fuel imports. Nor is it helping at present that the US is also talking about turning off reactors.
Meanwhile, traders and speculators stuck with material and producers suffering cash flow problems are ever more desperate to offload material.No rush to buy uranium, 9 News Finance by FN Arena 2 Sept 13, The spot market for uranium was never of much interest until the big surge took prices up well over US$100/lb in 2006. In that era, legacy contract obligations at much lower prices impacted on the earnings potential of the large and long-established players, such as Energy Resources of Australia in Australian terms, while new kids on the block, such as Paladin Energy relished the opportunity to secure contracts at more spot-aligned pricing.
Fast forward to the post-Fukushima era of 2013 and the tables have turned. Those noughties contract obligations have largely run off and the uranium price is wallowing in the depths. Lower cost, long-established producers such as BHP Billiton can at least bungle along (ERA has had its own specific production issues) while the high-cost later entrants are struggling to stay afloat. Paladin is the classic example.
It is interesting to recall that back in the uranium bubble period, one supportive argument for pricing into the future was that of the ultimate completion of the US-Russian HEU (highly enriched uranium) agreement, known as “Megatons to Megawatts”. Back in 2006 analysts were looking ahead to 2013 when the dismantling of Cold War surplus nuclear warheads and subsequent shipment of enriched uranium to the US for energy purposes was due to come to an end, highlighting the big supply hole the world would fall into at that time. No one, back then, could foresee Fukushima or its subsequent impact on the uranium price, although increased mine supply was always expected given then attractive uranium prices.
Well, history was made last week when the final shipment of Russian warhead uranium left the plant en route for St Petersburg for shipment to the US. And that’s how it ends: not with a bang, but with a whimper. Industry consultant TradeTech’s spot price indicator fell US$1.00 to US$34.00/lb last week.
Japan’s nuclear energy intentions are the swing factor at present. China’s reactor-building program provides underlying support for global uranium demand, but if Japan does not start turning back on more reactors, Japanese uranium stockpiles will continue to hit the market to pay for increased fossil fuel imports. Nor is it helping at present that the US is also talking about turning off reactors.
There is hence no rush from end-users of uranium, the utilities, to jump in and buy uranium supplies. Not at spot anyway. Utilities can pick around the edges at low prices but in terms of meaningful supply, contracts for 2014 delivery are of more interest and even then there’s no great rush. Meanwhile, traders and speculators stuck with material and producers suffering cash flow problems are ever more desperate to offload material…..
http://finance.ninemsn.com.au/newscolumnists/greg/8717126/no-rush-to-buy-uranium
It is interesting to recall that back in the uranium bubble period, one supportive argument for pricing into the future was that of the ultimate completion of the US-Russian HEU (highly enriched uranium) agreement, known as “Megatons to Megawatts”. Back in 2006 analysts were looking ahead to 2013 when the dismantling of Cold War surplus nuclear warheads and subsequent shipment of enriched uranium to the US for energy purposes was due to come to an end, highlighting the big supply hole the world would fall into at that time. No one, back then, could foresee Fukushima or its subsequent impact on the uranium price, although increased mine supply was always expected given then attractive uranium prices.
Well, history was made last week when the final shipment of Russian warhead uranium left the plant en route for St Petersburg for shipment to the US. And that’s how it ends: not with a bang, but with a whimper. Industry consultant TradeTech’s spot price indicator fell US$1.00 to US$34.00/lb last week.
Japan’s nuclear energy intentions are the swing factor at present. China’s reactor-building program provides underlying support for global uranium demand, but if Japan does not start turning back on more reactors, Japanese uranium stockpiles will continue to hit the market to pay for increased fossil fuel imports. Nor is it helping at present that the US is also talking about turning off reactors.
There is hence no rush from end-users of uranium, the utilities, to jump in and buy uranium supplies. Not at spot anyway. Utilities can pick around the edges at low prices but in terms of meaningful supply, contracts for 2014 delivery are of more interest and even then there’s no great rush. Meanwhile, traders and speculators stuck with material and producers suffering cash flow problems are ever more desperate to offload material…..
http://finance.ninemsn.com.au/newscolumnists/greg/8717126/no-rush-to-buy-uranium
