Analysts Unsure How Far Uranium Spot Price Will Drop

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Some analysts maintain it could sink below $100/lb over the next several months.

With the spot price of uranium having slid through the month of July, there are differences among analysts about how low the price will drop before it once again rises, as most expect it will. Some maintain it could sink below $100/lb over the next several months.

Although the spot price of uranium had been going up steadily since 2001, in July the price began falling before levelling off at the start of August. Ux Consulting called the $10/lb decrease reported July 23 the largest single-week drop in the history of the company's U308 price reporting, U308 being the form in which uranium is sold. Ux and other analysts have continued to see suppliers make unsolicited offers at lower and lower prices, trying to entice potential buyers back into the market.

One analyst pointed out that much of the current supply and demand is discretionary. And while some sellers may be lowering their prices a bit, those sellers can pull out of the market any time they believe the price has dropped too far, he said, suggesting that the current price slip might begin to level off soon.

On the buy side, there are few, if any, utilities looking for material over the next three months or so. Most utilities "are out of money" to spend on uranium this year, said one analyst, and any that need material in 2008 will probably not conclude any deals until late this year.

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