By Andrew Nelson
February might not have been a busy month as far as uranium volumes go, but it sure was an eventful month. The market saw some on and off levels of pronounced volatility, mostly driven by talk of possible production cutbacks earlier in the month, which was more than offset by reports later in the month of Japanese utilities selling off stock.
Industry consultant TradeTech reports there were twenty-one transactions adding up to around 3.2m pounds of U308 changing hands over the course of the month. Traders and producers were again the main drivers of spot market activity.
The big news came out on the 20th. That's when The Japan Times reported that not one, but two Japanese utilities were looking at taking the unheard of step of selling down uranium inventory. It was reported that Japan Atomic Power Company (JAPC) had already sold some inventory to a supplier in order to raise cash to pay back loans, while Tokyo Electric Power Company was said to be considering the same move.
That's exactly when spot prices started to head south and as a result, trading activity slowed as we neared the end of the month. By the 28th of February, TradeTech's Exchange Value had pulled back US$1.75 to US$42.00 per pound.
There was much more than the usual amount of activity in the term market, with seven transactions accounting for over 2 million pounds of uranium for delivery between 2014 and 2017. The activity wasn't great news for sellers either, with TradeTech's Mid-Term U308 Price Indicator for February down US$3.00 to US$46.00 per pound over the course of the month. The Long-Term Price Indicator stayed put at US $57.00 per pound.
There is still plenty of activity out there. Offers are due this month to a non-US utility seeking approximately 2 million pounds for delivery between 2014 and 2020. TradeTech also reports a number of other utilities are still looking at potential purchases totalling about 8 million pounds.
Things started to improve a bit in the market last week, with the big drop in spot prices towards the end of February drawing out some more buyers. Still, transactions were thin, with only four reported with just 900,000 pounds changing hands. The problem is that most buying interest remains discretionary, with current spot supply more than enough to meet existing demand.
Trade Tech reports that last week's buyers included utilities, as well as the more usual intermediaries, and producers. There was a bit of good news in that two non-US utilities have entered the market looking for more than 400,000 pounds for spot delivery.