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Uranium Prices Drop as Demand Declines on Japan Crisis, Ux Says

By Jason Scott -

Uranium spot prices fell 0.8 percent as demand for the nuclear fuel declines a month after Japan’s Fukushima Dai-Ichi atomic power station was damaged by an earthquake and tsunami, Ux Consulting Co. said.

Uranium-oxide concentrate for immediate delivery dropped $0.50 to $58.50 a pound in the seven days ended April 11, Ux said in an e-mailed report today. The price is based on the most competitive offer tracked by the Roswell, Georgia-based company.

The magnitude-9 earthquake and ensuing tsunami on March 11 that caused radiation leaks at the Tokyo Electric Power Co.- operated plant led buyers of the nuclear fuel to retreat, according to Ux. The crisis is likely to hurt the atomic power industry’s credibility more than the 1986 Chernobyl disaster, UBS AG analysts said April 4.

“Activity on the spot market remains limited with very few active buyers or sellers,” Ux said in the report. “Sellers that had been active appear to be taking a more protracted approach to the market, as many participants are now back to a wait-and-see approach.”

Nuclear-power utilities buy the bulk of their uranium for processing into fuel from mining companies, with the contracts mostly extending beyond 12 months. The market for immediate delivery, or spot market, allows trading for delivery within a year and includes financial investors. The U.S. government also periodically conducts auctions to reduce stocks.

The price of the nuclear fuel, which reached a high of $136 a pound in 2007, may find a floor at $55 a pound, Ux said in the report.

“There have been several discussions of interest levels by utilities as price falls back to the $55 level,” it said. “In addition, producers and other participants have also voiced potential buying interest as price falls.”

To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net

To contact the editors responsible for this story: Clyde Russell at crussell7@bloomberg.net; James Poole at jpoole4@bloomberg.net