By Greg Peel

Uranium market participants gathered in London last week for the World Nuclear Association Annual Symposium and it appears, as is often the case when industry colleagues get together to gee each other up, that some buying interest emerged as a result.

Industry consultant TradeTech reports buyers returning to the market to exploit current low prices with demand emerging from both utilities and traders. Nevertheless, supply remains sufficient even at these levels and hence after five transactions totalling 600,000lbs of U3O8 equivalent, TradeTech's spot price indicator managed only a US25c gain by week's end to US$34.35/lb.

New demand has also emerged in the term market although no new transactions are reported. TradeTech's term price indicators remain at US$38/lb (mid) and US$53/lb (long).

Ux Consulting's annual summer survey of uranium suppliers and consumers has found that more than half of respondents believe the spot uranium price will still be in the current US$35-40/lb range by year end. Looking ahead five years, the greatest proportion (~30%) sees a spot price of US$50-60/lb, while around half of responses are spread across expectations from US$60-70/lb to US$90-100/lb.

The results echo a general feeling around the market, including uranium analysts in Australia, that uranium prices must go back up again eventually. As to when eventually might be is the case in point, with many analysts having previously expected some movement by now. On the supply-side, the HEU deal between Russia and the US has now ended, Cameco's giant Cigar Lake project is once again delayed, Japanese stockpiles will not be sold if Japanese reactors are restarted, and at these low prices, no new supply will be developed. On the buy-side, utilities have been taking advantage of such low prices to build up stockpiles. But just how big a stockpile do they need to build?

The issue of low uranium prices discouraging new supply is not just one of the spot price itself but one of the marginal cost of new supply. Producers suggested to Ux that the average marginal cost of production of operating mines is around where the spot price is now, but the marginal cost of developing a new mine is more like US$65-70/lb.

From the nuclear energy prospective, respondents rated the most significant demand-side influences as, in descending order of influence, Japanese reactor restarts, Chinese reactor build, the premature shutdown of older US reactors and the emergence of newcomer countries to nuclear energy (about equal), and the upcoming French nuclear licence renewals.

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