LONDON/BEIJING (Commodity Online): Even as the world is going gaga over Platinum and Palladium following the rise in auto sales, investors have got another option in uranium. According to reports, China is buying significant quantities of uranium, so uranium price could lift in anticipation of the demand in 2011 and less supply.

Thomas Neff of Massachusetts Institute of Technology expects China to buy as much as 5000 tonnes of uranium this year, twice as much as it consumes as it builds stockpiles for its new reactors.

RBC Capital Markets has projected a bump in the uranium price next year of 32 per cent to an average of $55 per pound as demand erodes supplies.  Current uranium price is quoted at around $41.75 per pound.

China is on record as wanting to build at least 60 new reactors by 2020, increasing its spend with Cameco, one of the world’s largest uranium producers.

In India also, demand for uranium is on the rise with the country planning mega nuclear power plants in the coming years.

After being mined and milled, uranium concentrate exists in the chemical form U3O8, also known as yellowcake. Impurities are next stripped out at a refinery, which produces UO3. This intermediate product is then converted to usable fuel.

There are only four conversion facilities in the Western world. One, Cameco’s Port Hope complex in Canada, was temporarily shuttered a few years ago after ground contamination was discovered. This isn’t the first facility to experience such problems.

Honeywell owns the only US conversion plant, located in Metropolis. The Metropolis facility shut down for around six months back in 2003-2004, which caused a tightening in the fuel supply and drove up uranium prices. Both equipment failures and a labor dispute are weighing on production. Union workers have been locked out since June 28.

One of the uranium price benchmarking firms reported a 4.8% jump in the spot price on Friday, and traders are reacting to that move today.

Meanwhile, Palladium and Platinum advanced last week after strong earnings from Ford provided more evidence of a recovery in the auto industry.

The two metals, used to make catalytic converters for vehicles, joined Copper in higher settlement prices.

The improved second-quarter performance for several auto companies boosted optimism about the industry.

Ford Motor Co posted its fifth straight quarterly profit and said its US sales surged 28 percent in the first six months of the year.

However Ford also said it would make less money in the second half of this year because of seasonal plant shutdowns, costs for new product launches and rising prices for raw materials.

Palladium for September delivery gained $9.85 to settle at $466.75 an ounce while October platinum rose $13.40 to settle at $1,542.80 an ounce. September copper continued its strong trend this week, settling up 2.05 cents at $3.1850 a pound.
(Source: One News Page & News Agencies)

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