Uranium Exploration (U3O8)

[fazoolius]

Oversupply sinks price of uranium

YURIY HUMBER

Bloomberg News

August 22, 2007

Uranium tumbled 14 per cent 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 Co. LLC.

The radioactive metal fell $15 (U.S.) to $90 a pound, Roswell, Ga.-based Ux said Monday in its Ux Weekly report. The decline is the biggest ever recorded by Ux. The price of uranium for immediate delivery has dropped 35 per cent 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 yesterday, adding he is "surprised" at the extent of the drop.

Record high 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, consulting company TradeTech LLC said on July 27.
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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.

Uranium for delivery in December on the New York Mercantile Exchange fell $2, or 2.9 per cent, to $68 a pound on Monday. The futures have dropped 50 per cent in New York in the past month.

Kevin Smith, head of commodity trading 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.