By Andrew Nelson
January was an interesting if not riveting month for uranium market watchers. Volatility was the name of the game, but the good news for investors and producers is that while it may have been volatile, January was still a positive month in terms of spot price movements.
We started the month off with a US$43.25 per pound spot price and a hope that the advances we'd been seeing for the last few months of 2012 would continue on into the new year. After all, everyone and their dog had been harping on for months about how supply was dwindling and demand must improve at some point. The Japanese restarts, Chinese reactor building, growing Indian demand: Well it seems the less supply more demand mindset is finally starting to gain some traction.
January ended with TradeTech's U308 Spot Price Indicator sitting at US$43.75/lb, up US$0.50 on December's price and flat on last week's Weekly Price. Prices did trade as high as US$44.50/lb towards the end of the month, but quickly came back to settle where we are now. The little spike in the spot price was brought on by a pickup in speculative activity rather than organic fundamentals, with most of the increased buying activity coming from financial entities and traders.
As far as TradeTech is concerned, there are a number of issues currently at play. First, political unrest in the West African nation of Mali. While Mali isn't itself a uranium producer of note, next door neighbour Niger is. Next, the production cuts brought about by low uranium prices are also starting to have an impact. Lastly, there are some stringent new safety measures being proposed by Japan's new Nuclear Regulatory Authority, which have taken the shine off of the Japan story over the short term once again.
As far as activity last month goes, TradeTech reports that every new buying inquiry encouraged sellers to lift offer prices, with buyers generally more willing to pay higher prices in order to secure material. The activity also woke up a number of utilities, who started to jump back in. In all, there were 33 deals booked over the course of January that saw some 4.6m pounds of uranium change hands. This compares to just 22 transactions and 2.7m pounds in December.
There were also three transactions reported in the term uranium market over January, with three US utilities picked as preferred suppliers for mid-term deliveries. Some new demand was also reported in the term market over the course of last month, with TradeTech noting the entry of two non-US utilities.
The action saw TradeTech's Mid-Term U3O8 Price Indicator push up to US$49.00/lb, up US$1.00 from last month's value. The Long-Term indicator stayed put at US$57.00/lb.
Last week there were just four transactions reported on the spot market that saw 800,000 pounds of uranium find a new owner. The buyers were again traders and financial entities, although as we mentioned earlier, utilities have also joined the fray. Otherwise, market participants continue to struggle with the uncertainties facing the market.
Spot, mid and long-term markets finished off the last week of a hectic week of January with very sedate performances. All prices were unchanged from the previous week and ended the month at the above mentioned levels.