Uranium

October 02, 2007 Uranium spot price falls Publisher: U3O8.biz Author: Luke Brocki The spot price of uranium fell for the first time in nearly a month on Sunday. Industry indicator TradeTech posted a $10-drop to US$75 per pound U3O8, a small decline compared to the $38-drop during August's price adjustment that sent speculators fleeing from the market. Sunday's decline was driven by the ready availability of spot supplies offered by sellers looking for cash, Tradetech said in a market report. Seven different sellers have entered the market since June, offering 2.7 million pounds U3O8 equivalent for sale. (U3O8 is the chemical formula for yellowcake, or concentrated uranium oxide obtained through the milling of uranium ore.) The biggest seller of the seven was the US Department of Energy (DOE), which entered the market in August, seeking bids on 520,000 pounds U3O8 contained in UF6. (UF6 is the chemical formula for uranium hexafluoride, a compound made prior to the uranium enrichment process, but after mining. UF6 is made when yellowcake is combined with anhydrous hydrogen fluoride and fluorine gas in a series of chemical reactions.) DOE released its auction results on Friday. The winning bidders include three US utilities and one hedge fund, with the average price for all bids received reported as $96.83 per pound of UF6. Then, in late September, another seller entered the market, accepting multiple bids to sell about 300 metric tons as UF6 or equivalent U3O8 at roughly $75 per pound U3O8. This prompted Sunday's spot price drop. DOE's uranium inventory adds uncertainty to uranium supply, since the department has huge supplies dispose of, expecting to do so over the next 20 years, offering chunks small enough not to disrupt the delicate supply/demand balance in the marketplace. TradeTech also reported that uranium's price volatility was a key issue at last week's Platts Nuclear Fuel Strategies conference in Arlington, Virginia. Reports indicate that the metal's price volatility could change the way the nuclear industry does business. The goal is increased transparency---currently, uranium is not traded on the open market, like other metals---but purchases by the investment community are stressing the spot market. The volatility is expected to calm once utilities focus on rebuilding uranium inventories. They have been reluctant to do so at current price levels, instead negotiating contracts with new sources of production and hedging their bets in futures. Uncertain or not, uranium stocks are doing great. The Resource World composite uranium stock index gained 32.57 points Monday, or 2.62 per cent, to close at a record 1,241.93. That's slightly higher than when it tested the 1,200-mark earlier this summer, when the spot price was at a record $138 a pound. British analysts expect uranium prices may rise, fuelled by the increasing numbers of planned and proposed nuclear reactors. Since January 2007, the global plans for new nuclear power plants have risen 37 per cent, up by 82 to 304, with China leading the charge. The Asian tiger plans to build 114 new nuclear reactors, up from projections of 63 last January, a whopping jump of 81 per cent. The United States is now planning 32, compared to the 23 it proposed in January; a 39-per cent rise. Just last week, NRG Energy Inc, the second-largest power producer in Texas, filed the first application to build a nuclear reactor in the United States since 1979's Three Mile Island meltdown in Pennsylvania. The US Nuclear Regulatory Commission expects to receive the32 proposed applications through 2