Uranium Spot Price Advances
Source: Uranium Investing News, Melissa Pistilli (4/21/09)
"A lively financial market in uranium trading has developed in recent years."
While events such as demand out of Asia or supply problems may be helping to advance the spot price, it may be low prices themselves that are interesting buyers.
"If things are cheaper, you buy more," said Glyn Lawcock, head of resources research at UBS AG. "The price has been under a lot of pressure. Now, there's renewed demand in all commodities and we're seeing active talks" concerning the construction of new nuclear plants around the world.
The spike in the uranium price may also be due to an announcement out of Lehman Brothers Holdings that the firm does not intend to flood the market with the surprising amount of U308 inventory it's been sitting on since September.
Last week, Lehman Brothers confirmed reports that it has nearly 500,000 pounds of yellowcake stored in several locations worth about $18 million. There were concerns that the firm might spark a fire-sale in a bid to pay off its estimated $200 billion in unsecured liabilities.
The firm has been trying to sell the inventory for months; however, with the spot price falling steadily Lehman's decided to put sales on hold for now.
Lehman CEO Bryan Marshal has made assurances that the stockpile will be sold responsibly. "We plan on gradually selling this material over the next two years," he said. "We are not dumping this on the market and have no fire-sale mentality."
How did the brokerage come to possess such a large holding of uranium ore?
The stockpile is leftover from a commodities-trading contract initiated prior to Lehman's collapse. "A lively financial market in uranium trading has developed in recent years. While commodities such as oil and precious metals are dealt in futures contracts which rarely see delivery, the relative immaturity of uranium trading means that trading firms sometimes end up taking ownership of the stuff," says the Guardian's Andrew Clark.