Washington (Platts)--23Feb2011/457 pm EST/2157 GMT

The uranium spot price fell below $70/pound U3O8 over the last week on reports that at least one Chinese utility is looking to sell some of the uranium at Western UF6 conversion facilities. Market sources put the amount at less than 1 million pounds.

TradeTech on Friday cut its spot price to $68.50/lb U3O8, down $4.25/lb a week earlier, saying sellers reacted to Chinese sale news by immediately dropping offer prices. Some buyers retreated from the market, in the belief that the price might drop still more. TradeTech said that "a lack of clarity and speculation about the true motivation for the sale provided momentum to the price decline."

One market source said the Chinese have talked over the past several years with trading companies about selling some of the uranium they were holding at Western converters. He said that if the reports are true, the Chinese utility may have been motivated to sell by the recent run-up in uranium prices, believing it could turn a nice profit. He added that had the Chinese wanted to depress the spot price they would be selling much more material than under 1 million pounds.

Ux Consulting on Tuesday also lowered its spot price to $68.75/lb, $3.50 below its week-ago price. UxC said reports of new demand resulted in a pullback of some offers late last week and early this week, leaving only limited quantities available for sale.

One analyst said Kazakhstan government-owned nuclear holding company Kazatomprom, normally a seller of uranium, was emerging as a buying, looking for at least 300,000 lb U3O8. For several weeks there have been rumors in the market that Kazatomprom had been quietly looking to buy uranium, several analysts said, but the sources it approached apparently were unable to satisfy Kazatomprom?s needs.

UxC said that "given the renewed activity on both sides of the market, it would not be surprising to see continued price volatility over the next several weeks with price potentially making quick swings in both directions."

UxC's broker average price was $67.75/lb Tuesday, down from $71/lb on February 15. The BAP is a daily calculated midpoint of the bids and offers reported by three brokers -- ICAP Energy, Evolution Markets, and MF Global.

The Platts NuclearFuel range for the this week was $64/lb-$72/lb U3O8.

--Michael Knapik, newsdesk@platts.com

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