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N-deal will boost uranium spot trading

This weekend’s approval by a group of nuclear nations to end a ban on uranium fuel supplies to India is likely to lift the depressed...

By: Reuters | London |
September 9, 2008 1:04:22 am

This weekend’s approval by a group of nuclear nations to end a ban on uranium fuel supplies to India is likely to lift the depressed uranium spot price, analysts and traders said on Monday.

India’s nuclear reactors are currently running at 50 per cent of capacity due to a fuel shortage and with plans to more than double its reactor fleet over the next 15 years Indian demand is seen growing substantially.

The country aims to supply 25 per cent of its electricity from nuclear power by 2050 and it has currently 6 reactors under construction expected to be completed in 2010, according to World Nuclear Association. Initially, India is seen buying uranium to get its nuclear reactor fleet, with 2 mid-sized and 15 small reactors, operating at full power. Reactors are running at around 50 per cent, owing to a shortage of uranium.

“People have been expecting 2-3 million pounds to be purchased … it could be enough to push the price up,” the trader said. In 2007, turnover in the spot market is estimated by traders to around 10-15 million pounds. The price of spot uranium hit a record of $136 per pound in June 2007, skyrocketing from just $7 in 2000 due to a revival of interest in nuclear energy. But since its all-time high the spot price has slipped to $64.50 with little interest from investors and utilities. “There is still plenty of material out there on the spot market but India is important in the medium and long term,” said another uranium trader. It was uncertain how much inventory India would like to build up to feed its reactors, currently consuming around 500 tonnes per year or 1.3 million pounds, according to a Macquarie Bank presentation.

$7 per pound The price of spot uranium in 2000

$136 per pound The price of spot uranium in June 2007

$64.5 per pound The current price

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