Slumps 14% on Excess Supply, Auction, Ux Says (Update2)
By Yuriy Humber
Aug. 21 (Bloomberg) -- Uranium
tumbled 14 percent last week as supply exceeded demand and
the U.S. Department of Energy prepared to sell inventories
of the metal used to fuel nuclear reactors, said industry
pricing service Ux Consulting LLC.
The radioactive metal fell $15
to $90 a pound, Roswell, Georgia-based Ux said yesterday in
its Ux Weekly report. The decline is the biggest ever
recorded by Ux. The price of uranium for immediate delivery
has dropped 35 percent since trading at a record $138 a
pound in June.
``Maybe in the fourth quarter
we'd look for uranium to move up, but it could head lower
before it goes higher,'' Glyn Lawcock, head of resources
research at UBS AG in Sydney, said today in a telephone
interview, adding he is ``surprised'' at the extent of the
Record prices have spurred
increased supplies of uranium since the first half, when
there was a shortfall. Current supplies of uranium oxide
concentrate, or yellowcake, are five times demand,
TradeTech LLC said July 27.
The Department of Energy stopped
collecting bids last week for an auction of 200 tons of
uranium hexafluoride, a processed form of the metal
equivalent to 519,000 pounds of yellowcake.
``The activity surrounding this
event has had noted impacts on analyst predictions, and in
turn, on participants' perceptions of how this market could
move,'' Ux said in its report.
50 Percent Drop
Uranium for delivery in December
on the New York Mercantile
Exchange fell $2 or
2.9 percent, to $68 a pound yesterday. The futures have
dropped 50 percent in New York in the past month.
Kevin Smith, head of
at New York-based Evolution Markets Inc., said spot prices
aren't likely to fall ``much'' lower. ``I have buyers in the
low $90s so there is support there,'' he said by e-mail.
Canada's Cameco Corp., the
largest uranium producer, fell 94 cents, or 2.4 percent, to
C$38.31 in Toronto trading as of 12:32 p.m. local time,
extending the stock's decline this year to 19 percent.
Uranium One Inc., which is developing South Africa's largest
uranium deposit, declined 15 cents, or 1.3 percent, to
stocks will have
``another rough week,'' UBS's Lawcock said.
The results of the Department of
Energy auction at the end of this month and an update on
global uranium demand from the World Nuclear Association on
Sept. 5 will bring more ``clarity'' to the market, RBC
Capital's analysts including Adam Schatzker said today in a
TradeTech LLP, which provides a
rival pricing service, had a record weekly drop of $15 a
pound in the week ending Aug. 10.