Uranium Prices Update 09 February 2010

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The chart above shows the current price of uranium standing at $60.00/lb according to TradeTech having come down steadily from around the $95/lb level. In a news release on January 1, 2010, TradeTech had this to say:

A declining trend in uranium prices that began in 2008 continued into 2009, as TradeTech’s uranium spot price fell 15 percent 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.

“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 programs to meet rising energy demand.

Well it would appear that we can take one or two positives out of their statement, however, uranium could take some time in convincing us that it is becoming everyones favourite play. We are half way through the first quarter and the spot price for uranium stands at $42.25/lb as the chart from U308.com shows. We will observe uraniums progress and look for positive signs of activity before going on the acquisition trail.

All the best.