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About Uranium Stocks
Uranium Stocks was created to give investors a diversified look at uranium shares, spot prices, options markets, ore and production, canadian reverses and any other relevant issues that may affect shares prices across the globe.
Spot Price Examination Part 2
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Spot Price Examination Part 2
In Spot Price Examination Part 1 we looked at the overall sales of uranium u308 on the NYMEX futures market. This market is where the industry spot price is set.
But as we brushed over in part 1, questions arise to whether the spot price is actually meaningful when entering into private contracts.
In the article we learned only 540,250 pounds of Uranium were sold on the NYMEX futures market in our random example month of April 2007.
Inside of Cameco’s 2007 year end report comes this graphic;
Cameco is certainly a huge player. There 20 million estimated pounds of u308 production in 2008 is more than three times the estimated amount of u308 sold in futures contracts per year.
According to Cameco they close to half of their long-term fixed contracts included provisions for prices to be set near the spot price, with the remaining locked in at prices that are only increased by inflation adjustments.
Conclusion
While the overall spot market’s volume is a fraction of the overall uranium market, the spot price can affect a companies earnings based upon the style of fixed contract that is entered upon by consumers.