As we reported on July 2, 2007, the weekly spot U3O8 price survived 47 consecutive months without a drop in price.  Since then, the spot price has been on the decline.

Tradetech published in its Friday issue of Nuclear Market Review (NMR) a $10 drop in the spot uranium price to US$ 85.  NMR editor Treva Klingbiel reported, “This decrease in the price is largely due to the presence throughout the month of sellers driven by cash requirements, such as the US Department of Energy (DOE).”

For the spot uranium market, which generally trades relatively small amounts of uranium compared to that which is bought and sold in long-term contracts, the influx of this uranium sold by the US DOE was expected to drive the spot uranium price lower.  Since this was a sizeable sum for the somewhat languishing spot market, the liquidation of these assets disrupted the normal market mechanics.

Klingbiel clarified, “Ten transactions totaling almost 700 thousand pounds U3O8 equivalent are reported in the spot uranium market for the month of August. Of this total, approximately 520 thousand pounds U3O8 equivalent were sold by DOE.” The DOE stated that it will release the results of its auction of Natural Uranium Hexafluoride (UF6) - including the buyers (awardees) and the average price per kilogram sold on or about the September 28 delivery date.

As the small spot market digests the impact of the DOE auction, on top of an already supply-surplus situation recently found in the spot market, other factors may enter into play for the short term also.  The general apprehension surrounding financial markets due to the mortgage meltdown may possibly cause, or have already caused a trickle effect - triggering some speculators to rethink investments in uranium holdings.

However, long-term fundamentals still point to uranium supply shortages, with difficulties and hurdles ever present in the development and permitting stages for uranium mining companies.

The long-term uranium price remains at US$95/pound, according to TradeTech’s latest Nuclear Market Review on Friday, August 31, 2007.