Uranium Enrichment – What’s Driving Prices Higher

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As global interest in nuclear power continues to peak, increased demand for nuclear fuel is triggering higher uranium and enrichment prices. TradeTech’s uranium spot price climbed to $41 this month, while the long-term price for uranium enrichment rose for the third consecutive month to $122 per SWU (Separative Work Unit)—a sharp contrast to last year when enrichment prices remained flat at $113 per SWU.

As global interest in nuclear power continues to peak, increased demand for nuclear fuel is triggering higher uranium and enrichment prices. TradeTech’s uranium spot price climbed to $41 this month, while the long-term price for uranium enrichment rose for the third consecutive month to $122 per SWU (Separative Work Unit)—a sharp contrast to last year when enrichment prices remained flat at $113 per SWU.

The price of uranium, used to fuel nuclear power plants that generate about 16 percent of the world's electricity, has increased significantly in the past year due to demand from nuclear utilities that rose faster than mine production and drew down stockpiles. Similar to the uranium market, enrichment prices are experiencing upward pressure due to strong demand from the nuclear energy industry. On a worldwide basis, total uranium enrichment requirements increase gradually through 2015 to about 55 million SWU per year by the end of the period, according to TradeTech’s "Uranium and Enrichment Industry 2006 Market Report."

“Unfilled uranium enrichment requirements increase in an almost linear fashion throughout the period, reaching about 60 percent of requirements for the year 2012,” said R. Gene Clark, chief operating officer of TradeTech, LLC. The term unfilled requirements refers to the portion of requirements over a given period that, as of a given date, is not accounted for after the use of inventory and future deliveries under then-existing contracts. As such, it is the most relevant measure of future market activity—the amount of enrichment that must yet be procured in order to meet reactor requirements.

Today’s worldwide enrichment capacity exceeds requirements by one-third, but not all capacity is operable. In the USA, for example, USEC Inc.’s Portsmouth plant is in cold shutdown and its Paducah plant is not licensed to operate above 8 million SWU, according to the report.

“The Western market is in a precarious supply situation. As Western requirements grow, Western capacity is not planned to grow sufficiently to significantly change this shortfall situation,” Clark added.

TradeTech’s "Uranium and Enrichment Industry 2006 Market Report" is a comprehensive study that discusses how the market is preparing to address the current supply deficit and the effect on enrichment prices as the market attempts to bridge the gap between today’s shortfall and future enrichment capacity expansion.

(Editor’s Note: Uranium enrichment is a key step in transforming natural uranium into nuclear fuel for electricity production. It involves the process of increasing the concentration of U-235 and decreasing that of U-238. Uranium enrichment is sold as separative work units (SWU), the level of effort required to increase the concentration of U-235 in natural uranium.)

TradeTech, and its predecessor companies–NUEXCO Information Services, CONCORD Information Services, and CONCORD Trading Company–has supported the uranium and nuclear fuel cycle industry for more than 35 years, and is widely recognized for its expertise in trading activities and its comprehensive knowledge of the technical, economic and political factors affecting this industry. TradeTech provides expert market consulting, participates in the buying and selling of uranium products and services, and maintains an extensive information database on these industries. TradeTech publishes the Nuclear Market Review each Friday and The Nuclear Review, a monthly trade publication dedicated to the international uranium and nuclear energy industry.

For general and media inquiries contact:

TradeTech, LLC

600 Seventeenth Street

Suite 720 South

Denver, CO 80202

Phone: 303.573.3530

Fax: 303.573.3531

Internet: http://www.uranium.info

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