Uranium prices drop 24%

By Tom Stundza -- Purchasing, 8/15/2007 8:56:00 AM

The spot price of uranium, the metal used to make fuel for nuclear reactors, has fallen 24% to $105 this month, off a record high of $138 in June. TradeTech, an industry consulting company, points to an oversupply since utilities, the biggest buyers, have slowed purchases after building inventories. The uranium spot price tracked by Ux Consultants also fell in the past week, to $105/pound, according to a report on MineWeb.com.

A Bloomberg News Service report says uranium prices may fall to as low as $70 when the U.S. Department of Energy holds an auction next week of 200 tons of uranium hexafluoride, a processed form of the yellowcake. The price of uranium has risen in tandem with the popularity of nuclear power as governments from the U.S. to China seek to generate more energy without adding greenhouse-gas emissions.

Still, “uranium prices have almost doubled since the beginning of 2007, so you'd have to expect some kind of correction,'' says analyst Brian Mok at Research Capital in Toronto. George Assie, senior vice president of Cameco Corp., the world's largest uranium producer, tells analysts this month that “demand from spot market players -- the traders, producers and investor funds -- is uncertain as the large increase in the spot price has caused some to move to the sidelines.”