A quote from the Nuclear Market Review reported in this week’s issue:

“Two sellers that were evaluating bids in response to their auctions have concluded their evaluations and have decided not to sell at this time. “Both sellers preferred to make delivery in June while most bidders were seeking delivery for several months out.”

This statement is interesting and infuriating at the same time. Did the sellers back off because they wanted a June delivery as stated or did the bid price not meet their expectations? What were their expectations; $140? $150? $160? It brings into the spotlight the difference between ‘Stated Aims’ and ‘Real Aims’ the stated aim is a delivery issue and the real aim could be anything, that we the investors are not privy to, but we tend to think that it is a price issue. Opinions on a post card please! We have no wish to discredit the sellers in any way but the news has been slow to come out and on a ‘gut feel only’ basis it just does not feel right.

It is difficult to evaluate this almost non-event of a situation so we can only wait for the next auction to come along and give us an indication as to the spot price of uranium. The futures market is there as a guide but it is early days for the NYMEX, no doubt it will develop over time and become a useful indicator. According to Stock interview the current prices are June $136/lb, July $140/lb and December 2007 $154/lb.

The decision not to sell however is indicative of the power residing in the hands of the sellers and that they are able to negotiate from a position of strength being able to reject offers in the hope of receiving higher offers at a later date. This story will continue to roll with news, rumours, head fakes, et al, however we are still of the opinion that the demand for nuclear fuel has not disappeared and uranium will hit our long held prediction of $200/lb.

Have a good one.