Tradetech’s July 27th edition of Nuclear Market Review reports its weekly U3O8 spot price indicator has declined $6, down to $123. Tradetech held its indicator constant at $123 for the monthly edition of its Nuclear Market Review on July 31, 2007.

But is this decline a true reflection of the market?

The weekly industry trade magazine reported on July 27th,  “Early in the week buyers were showing a willingness to accept prices slightly higher than today’s $123.00, however, this changed mid-week, in large part, due to the psychological influence exerted on the market by published reports of severely lower prices.”

The possible circular effect of such market information may not be the only, or the responsible, factor in the spot price decrease.  Supply has responded to the demand with more U3O8 being offered in the spot market.  In addition, as we previously reported, the US Department of Energy is currently soliciting bids for the sale of up to 200 metric tons (mtU) of UF6, or approximately less than 520 thousand pounds.

After a period of low quantities of U3O8 being offered at the spot auction, recent steady quanities being offered has helped cause the spot price decline. Courtesy of Tradetech, www.uranium.info.

Gene Clark, CEO of Tradetech, offered us his insights into the price decline. He told us, "The recent downturn took quite a few of us by surprise, but in hindsight it's a reasonable outcome of the increasing spot supply and decreasing demand. There's that famous quote from Yogi Berra that goes, 'When you come to a fork in the road, take it!' The big question being debated in the uranium market right now is whether this is a fork in the road, and whether we should take it. The short term situation has definitely changed, but the long-term fundamentals have not."

Not surprisingly, with the downturn in the spot U3O8 market, uranium stock shares are also down.  However, some suggest this may be time for the bull to emerge again in the uranium market.

Matthew Smith of the Investar writes, “At this point I am bullish, especially after Friday where markets were down big again in the US and the index actually finished up…. If you believe in the Uranium Bull for years to come, then there should not be a problem, however if you are looking for quick money in the next week or a month out...you might want to check your strategy at this point.”

Though the spot uranium price may be declining, it is but the short term indicator. In the long term outlook, nuclear generated power continues to be an increasingly appealing option for countries seeking to generate power without massive greenhouse gases as a by-product.  As countries develop, they consume massive amounts of energy in their quest for modernization.

Such examples include Indonesia, which affirmed recently that they plan to operate their first reactor by 2016 and three additional nuclear power plants by 2025. Thailand has also been in talks with South Korea, one of the world’s major users of nuclear energy, to learn more about this energy source.  South Korea itself is aiming to increase its energy generation by nuclear power from its current 40 percent to 60 percent by 2035. 

Despite some negativity toward nuclear energy, the world continues to view nuclear generated power in a more favorable light. As such, we see the demand for uranium to only increase.