Sunday, March 25, 2007
uranium spot price 95 dollars
This past week, three transactions were reported by NMR editor Treva Klingbiel for less than one million pounds U3O8 equivalent. Two transactions of 650 thousand pounds U3O8 equivalent contained in UF6 and one for less than 300 thousand pounds of U3O8 were completed in the past week. Material was sold for immediate and June deliveries.My guess: anyone bidding less than $100 per pound in the auction next week isn't serious about being the winning bidder.
“Seven buyers continue to seek over three million pounds,” according to Treva Klingbiel She added that several additional utilities have begun making preliminary inquiries about future purchases. “Buyers remain willing to pay higher prices,” Klingbiel wrote.
I'll keep adding more stuff below in updates until the next uranium posting.
UPDATE March 27, 2007:
Well, it looks like the next phase of the uranium bull market has begun: When the Story Goes Mainstream.
Here's an article in the New York Times about the uranium mania written in that strange manner that newspapers have adopted over the decades.
...Mr. Shumway’s eyes light up and he cracks a grin as he ponders the fortune he now hopes to gain.But anyway, they cover the main points and of course the usual suspects are there: David Miller, StockInterview.com, James Finch, and I'm happy to report, Strathmore Minerals... he said, his eyes lighting up with a wry smile pondering the fortune he now hopes to gain.
“There’s big money in it,” he said as he probed piles of waste ore at Pandora with a Geiger counter....
UPDATE March 28, 2007:
One day later, the Wall Street Journal has an editorial ($$ subscription probably required) called "Our Atomic Future" arguing for adopting nuclear power.
Higher construction costs are more than compensated by lower fuel costs [even with yellowcake at $100/pound since fuel is not the dominant cost of running a reactor] and higher capacity ratings. America's existing nuclear plants are now operating so profitably that Connecticut Attorney General Richard Blumenthal recently proposed a windfall profits tax because the state's reactors were making too much money.and
The reason building nuclear plants has been expensive and time-consuming is because of exaggerated popular fears of the technology. The public is now coming around. Seventy percent now consider nuclear plants acceptable, meaning new plants will probably not become bogged down in endless court delays.And it doesn't matter much what people in the West do since China, India, Russia, and others are determined to build a lot of nuclear reactors.
Nufcor is lending out their stockpiles. They've lent out 40% of the stockpiles so far to those affected by the Cigar Lake and Ranger floods and plan to lend out the full 100%.
Utilities such as nuclear power plants in need of uranium but unable to source it on the market have borrowed the metal from Nufcor, as have producers who have delivery commitments but are unable to meet those cheaply through buying material at fiercely contested auctions.As Yogi Berra said, "Nobody goes there anymore, it's too crowded." Buyers complain that investors are the ones causing the price to go up by gobbling up the uranium, but if there was any significant surplus, it wouldn't work; certainly not at these prices.
Scorer reckoned that investors like Nufcor, Canada’s UPC and hedge funds hold 15 million lb of uranium, equating to eight percent of global consumption for one year....
You don't corner a market and push prices up by a factor of 10 by buying just 8% of global consumption. Normal consumption demand is going to be increasing by more than that.
If anything, the lending makes the market look even worse. Prices are this high and the stuff really hasn't even been taken out.
And this article is a good read.
I agree it’s hard to come to grips with $500-a-pound uranium, but my analysis shows that such a price might very well be sustainable. Here’s why …(warning: the comparison of uranium pellets to oil is flawed since it doesn't take into account the huge costs associated with converting the uranium into electricity. Also the unfilled uranium requirements argument is flawed since it doesn't consider how much of the future production is associated with the requirements. But then again, I've made flawed arguments about uranium at various times.)
Bubbly frothiness? Bring it on!
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