Uranium Rises First Time in Six Months on Output Cut, Purchases

Tuesday, Apr 21, 2009

Uranium advanced for the first time in almost six months after Energy Resources of Australia Ltd. reported a first-quarter output decline and trading increased.

Uranium-oxide concentrate for immediate delivery rose 2.5 percent, or $1, to $41.50 a pound, Denver-based pricing service TradeTech LLC said in a report April 17. Four transactions last week boosted April’s trading to more than 4.3 million pounds, compared with 2.2 million pounds in the first three months.

“If things are cheaper, you buy more,” said Glyn Lawcock, head of resources research with UBS AG in Sydney. “The price has been under a lot of pressure. Now, there’s renewed demand in all commodities and we’re seeing active talks” on building nuclear reactors in countries including Taiwan and the U.K., he said.

Uranium spot prices have pared losses of more than 26 percent since Dec. 1 after Asian countries, including China and India, said they didn’t plan to delay adding nuclear capacity. ERA, producer of about a 10th of the world’s mined uranium, also said last week that output fell 9 percent in the first three months on lower ore grades.

Lehman Brothers Holdings Inc. said last week it doesn’t plan a fire-sale of the uranium it holds to pay off an estimated $200 billion in unsecured liabilities. A potential sale of Lehman’s holding of the radioactive metal had been an overhang in the market, according to London-based CQS UK LLP, which invests in funds that hold uranium.

Weekly supply and demand stood at about 4 million pounds last week, according to TradeTech, which includes offers to buy as well as actual transactions in its calculation of demand.