Analysts at TradeTech have predict a recovery in the uranium market in 2010. Buyers from the USA will be attracted by the current price levels and purchases from China and India are expected to remain strong as they continue to build supplies for their ambitous nuclear programmes.
A declining trend in uranium prices that began in 2008 continued into 2009, as TradeTech’s uranium spot price fell 15% from US$52.00 per pound uranium oxide (U3O8) at year-end 2008 to $44.50 on December 31, 2009.
The uranium market attempted to recover from the effects of a global financial crisis that began in late 2008, and the spot price strengthened by mid-year. However, this trend was short-lived as several sellers competed aggressively to conclude sales and the spot price fell again in the second half of the year.
In early October, the spot price climbed briefly as BHP Billiton reported damage to the main shaft of its Olympic Dam that would take months to repair. The company declared force majeure on certain uranium deliveries, which brought a number of buyers, primarily traders and financial entities, to the market and the price rose to $50.00 per pound U3O8. By December, however, the spot price retreated as the US Department of Energy’s sale of uranium to fund cleanup of the Portsmouth uranium enrichment facility overshadowed the market.
The drop in spot prices in the second half of 2009 caused lower expectations of market participants, especially among buyers. “The psychological effect of decreasing prices led many utilities to relax purchasing plans and turn away attractive offers in the expectation of further price declines. While 2009 was a relatively active year for term contracting, a substantial number of utilities, particularly in the USA, continue to wait in hopes of catching the market at the absolute bottom before securing supplies for the longer term,” said TradeTech president Treva Klingbiel.
“Buyers are expected to return to the market during the first quarter of 2010 as a number of utilities have indicated they can justify discretionary purchases for inventory at current price levels,” Klingbiel added. In addition, buying from Asia is expected to remain strong as India and China, in particular, forge ahead with plans for expanded nuclear energy programmes to meet rising energy demand."
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