Uranium Prices: March Sees Retreat in Spot Prices, Optimism Builds Over Longer-Term

Recently, there has been a lot of focus on the uranium spot market with prices regrouping early in 2017 after falling to $17.75 per lb in December 2016. According to Uranium industry Uranium industry consultant TradeTech, in March demand interest from utilities looking for medium and longer term delivery contracts increased, but it failed to translate into increased interest in the spot market.

According to TradeTech, spot uranium prices declined 7% over March with a total of 21 transactions taking place. While weakness was evident in March spot prices, since the start of the year they have climbed by 15%. Year-to-date, pot transactions increased in number by 15% over the same period last year to 68, but volumes dropped 1.2%. While the decrease in spot prices is disappointing, an increase in interest in medium and longer-term deliveries shows a change in demand in the market and bodes well for future prices.

While spot prices are used as an indicator, most uranium supply agreements are through longer-term contracts and we will have to see some contracts being inked at higher prices before becoming truly optimistic. When it comes to longer-term contracts, TEPCO’s recent, and sudden cancellation of its long-term supply agreement with Cameco is a dark cloud over the market. In contrast, TradeTech’s report of increased interest for longer-term deliveries is positive.

Cantor Fitzgerald recently joined the list of those believing that the uranium market has bottomed. Cantor sees Kazatomprom’s output cut decision announced earlier in the year as the catalyst for a major change in the uranium market. Kazatomprom said that it would cut its annual uranium production by 10%, equivalent to about 3% of 2015 global production. According to Cantor Fitzgerald, since at least 2001, Kazatomprom has relentlessly increased production into an oversupplied market and is arguably the single biggest cause for the weakness in the commodity aside from the Fukushima disaster.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.