A number of buyers concluded transactions during May, which significantly reduced outstanding demand. The impasse between buyers and sellers ended this past month, with buyers apparently reconciling their expectations with recent price increases and current offers. Sellers moved increasingly toward market-related pricing terms for spot delivery, and buyers showed a renewed willingness to accept these offers. Exceptionally strong long-term demand continues to exert upward pressure on the spot uranium price as each pound held by sellers is considered more valuable with every new buyer that enters the market. At least one, and possibly two, uranium auctions are expected in June. Buyers are expected to compete aggressively for this material and TradeTech expects uranium prices to continue their upward climb in June.

Aggressively competing for tight uranium supplies lends credence to a possible rise through the $50/pound level before the G8 Summit ends.

ANOTHER BAD HURRICANE SEASON

Unusually bad weather drives up energy prices. This summer’s hurricane season may be the equivalent to this past winter’s European gas shortages, which came courtesy of the Ukraine/Russian squabbling and a bad European winter. Many countries began expressing interest in a nuclear energy program after that episode. Another climate event might compel more to head for more nuclear.

Over the past two decades, hurricane watchers have learned to pay attention to Dr. William Gray of Colorado State University’s Department of Atmospheric Science. While based in hurricane-absent Fort Collins, Colorado, his atmospheric studies have proven Nostradamus-like prescient over the past 22 years. Why are we talking about hurricanes? Hurricane announcements tend to drive up energy futures. The number of hurricane days adds pressure to an already tight energy market. Hurricanes start to show up on an investor’s radar during August and remain there through September.

Because of anticipated tight uranium supplies for June utility buying and the anticipation of Russian fireworks in mid July, a fitting climax for a strong surge in uranium pricing might come along with a major hurricane hitting the Gulf Coast. Last year’s Katrina can serve as a reminder that climate changes can impact energy prices, uranium included. Based upon the weather forecasts, we believe in the high probability of an encore to last year’s energy shortages.

While this year’s hurricane season is not expected to match the devastation of 2005, it still highly rates at 195 percent for a Net Tropical Cyclone Activity rating. Last year’s first tropical storm, Arlene, formed on June 9th. This year’s Tropical Storm Alberto formed a year and a day later. Exclude the busiest hurricane season in 154 years of storm-tracking, and this year is expected to rate well above the average hurricane season. The National Oceanic and Atmospheric Administration (NOAA) estimated up to a total of 16 storms, as many as ten hurricanes and up to six Category 3 or higher hurricanes. Dr. Gray’s team estimates similar numbers, but places the brunt of the storms’ impact on the eastern United States.

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