Uranium price higher unless speedy supply response

LONDON – Uranium prices may be capped only if producers in Asia and Africa step up production, Jeff Combs, president of Ux Consulting Co., told a seminar in London last week.

“The market is still under upward pressure… in the near term there is certainly room for prices to go higher,” Combs said during the NYMEX and UxC seminar.Any supply shock could send prices much higher as there was a clear lack of supply, Combs said.But with uranium spot prices at levels last seen in the 1970s – this week spot uranium hit US$125 per pound, up from US$7 in 2000 – producers were eager to sell more.”One way prices can come under pressure is if Kazakhstan and Africa quickly expand their production,” Combs said.Kazakhstan is the world’s third largest uranium producer after Australia and Canada.In Africa, Namibia and Niger are large producers, contributing to global primary supply of 46 530 tonnes in 2006.Prices reflected strong demand from nuclear reactors given high oil prices and the global effort to clamp down on carbon dioxide emissions, blamed for climate change.Production problems due to flooding at two major production sites, Ranger and Cigar Lake, and low investment in exploration and production have also fuelled prices.Spot prices were unlikely to be affected by the NYMEX contract launched on May 7, Combs said.The New York Mercantile Exchange (NYMEX), a subsidiary of NYMEX Holdings, and the consultancy UxC signed a 10-year deal in April to introduce on- and off-exchange traded uranium futures products on CME Globex and NYMEX ClearPort platforms.”The futures market will reveal a forward price curve but it will not push prices higher or lower,” Combs said.The 250-pound uranium contract is listed for 36 consecutive months and is settled on the spot month-end U3O8 price published by UxC.Nampa-Reutersin the near term there is certainly room for prices to go higher,” Combs said during the NYMEX and UxC seminar.Any supply shock could send prices much higher as there was a clear lack of supply, Combs said.But with uranium spot prices at levels last seen in the 1970s – this week spot uranium hit US$125 per pound, up from US$7 in 2000 – producers were eager to sell more.”One way prices can come under pressure is if Kazakhstan and Africa quickly expand their production,” Combs said.Kazakhstan is the world’s third largest uranium producer after Australia and Canada.In Africa, Namibia and Niger are large producers, contributing to global primary supply of 46 530 tonnes in 2006.Prices reflected strong demand from nuclear reactors given high oil prices and the global effort to clamp down on carbon dioxide emissions, blamed for climate change.Production problems due to flooding at two major production sites, Ranger and Cigar Lake, and low investment in exploration and production have also fuelled prices.Spot prices were unlikely to be affected by the NYMEX contract launched on May 7, Combs said.The New York Mercantile Exchange (NYMEX), a subsidiary of NYMEX Holdings, and the consultancy UxC signed a 10-year deal in April to introduce on- and off-exchange traded uranium futures products on CME Globex and NYMEX ClearPort platforms.”The futures market will reveal a forward price curve but it will not push prices higher or lower,” Combs said.The 250-pound uranium contract is listed for 36 consecutive months and is settled on the spot month-end U3O8 price published by UxC.Nampa-Reuters