From the archive, originally posted by: [ spectre ]

URANIUM FUTURES MARKET
http://www.uxc.com/
http://www.uranium.info/
http://www.marketwatch.com/quotes/nmx

http://www.nymex.com/press_releas.aspx?id=pr20070416a

Contact: Anu Ahluwalia, NYMEX, 212-299-2439 or  Keil Decker, NYMEX,
212-299-2209

Title: NYMEX Partners with UX Consulting to Offer Uranium Futures
Contracts

New York, NY, April 16, 2007 – The New York Mercantile Exchange, Inc.,
a subsidiary of NYMEX Holdings, Inc. (NYSE:NMX), the world’s largest
physical commodity exchange, today signed a 10-year agreement with the
Ux Consulting Company, LLC (UxC), the global uranium pricing index and
information leader, to introduce on and off-exchange traded uranium
futures products on the CME Globex® and NYMEX ClearPort® electronic
platforms on May 6 for trade date May 7.

NYMEX and UxC will work together to provide marketing and education
for these financially settled contracts, which will serve as the
pricing benchmark for this rapidly growing industry.

NYMEX Chairman Richard Schaeffer said, “We are excited to introduce
uranium futures contracts and to provide the industry with a
transparent price discovery mechanism. We expect to create a benchmark
contract for this important and underserved global market. NYMEX is
gratified to launch innovative products, and uranium is uniquely
positioned to act as a complement to both our energy and metals
product offerings. We are proud to partner with Ux Consulting, the
recognized market leader.”

UxC President Jeff Combs said “The experience this decade has clearly
indicated that the uranium market would benefit from additional price
transparency, especially in terms of forward prices, as market
participants formulate budget and investment decisions in this
critical period of a renaissance in nuclear power. We are pleased to
partner with NYMEX, the global leader in commodities-based futures
trading, in the introduction of uranium futures products, and applaud
NYMEX for investing the time and resources necessary to make uranium
futures a reality.”

About NYMEX Holdings, Inc.
NYMEX Holdings, Inc. (NYSE:NMX) is the parent company of the New York
Mercantile Exchange, Inc., the world’ largest physical commodities-
based futures and options exchange in the world, offering futures and
options trading in energy and metals contracts and clearing services
for more than 300 off-exchange energy contracts. Through a hybrid
model of open outcry floor trading and electronic trading on CME
Globex® and NYMEX ClearPort® , NYMEX offers crude oil, petroleum
products, natural gas, coal, electricity, gold, silver, copper,
aluminum, platinum group metals, emissions, and soft commodities
contracts for trading and clearing virtually 24 hours each day.
Further information about NYMEX Holdings, Inc. and the New York
Mercantile Exchange, Inc. is available on the NYMEX website at
http://www.nymex.com.

About Ux Consulting
The Ux Consulting Co., LLC (UxC) is the leading source of nuclear
industry market information. Through its consulting, information
services, and publications, UxC provides in-depth coverage and
analysis of nuclear fuel market trends. Through its Ux Weekly
publication and daily news headlines service, UxC keeps its worldwide
clients abreast of market price and nuclear industry developments.
Further information about UxC is available on the UxC website at
http://www.uxc.com
# # #

Forward Looking and Cautionary Statements
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act, with respect
to our future performance, operating results, strategy, and other
future events. Such statements generally include words such as could,
can, anticipate, believe, expect, seek, pursue, and similar words and
terms, in connection with any discussion of future results. Forward-
looking statements involve a number of assumptions, risks, and
uncertainties, any of which may cause actual results to differ
materially from the anticipated, estimated, or projected results
referenced in forward-looking statements. In particular, the forward-
looking statements of NYMEX Holdings, Inc., and its subsidiaries are
subject to the following risks and uncertainties: the success and
timing of new futures contracts and products; changes in political,
economic, or industry conditions; the unfavorable resolution of
material legal proceedings; the impact and timing of technological
changes and the adequacy of intellectual property protection; the
impact of legislative and regulatory actions, including without
limitation, actions by the Commodity Futures Trading Commission; and
terrorist activities and international hostilities, which may affect
the general economy as well as oil and other commodity markets. We
assume no obligation to update or supplement our forward-looking
statements.

http://www.upi.com/Energy/Analysis/2007/05/04/analysis_new_step_for_uranium_trading/

Analysis: New step for uranium trading
May 4, 2007   /  By BEN LANDO
UPI Energy Correspondent

WASHINGTON, May 4 (UPI) — When the New York Mercantile Exchange
launches a first-of-its-kind uranium futures contracts Sunday, it sets
a new stage in the growing uranium market. But the project, a venture
with Ux Consulting, is likely not to settle the rocky road uranium
prices have ridden lately.

Uranium futures products traded on and off the exchange will be
introduced on the CME Globex and NYMEX ClearPort platforms, ready for
trade Monday.

Utilities buy fuel for their reactors in contracts that guarantee
supply but not a fixed price. The price floor is set at market price
on contract-signing day, but they pay market price on the day of
delivery.

The NYMEX/UXC project is intended to change that, said Jeff Combs,
president of Ux Consulting. He said it will add transparency to the
global uranium contract market and “development of a forward price
curve.”

“In other words, this contract runs out 36 months on a monthly basis
so there will be price points, bids and offers out in the future
indicating what people think is going to happen to the market and what
position they’re willing to take in either buying or selling depending
on what they think the price is going to be,” Combs said.

“The only way you can get fixed prices in the future is to buy uranium
on the spot market and hold it, but that’s not too practical if you’re
going out further in the future, and especially since spot supplies
are tighter now than they are likely to be in the future. And that’s
the other purpose of futures markets is it provides the hedging
function.”

Historically, government development drove the uranium market.
Military buildup of nuclear weapons prompted purchases.

“With the advent of commercial nuclear power, the U.S. government
dictated uranium demand by virtue of its enrichment-contracting
policies,” Combs said. This built up inventories, which the nuclear
power industry over the past 20 plus years has largely relied on,
depressing the price of uranium. Contracts stalled and investment in
exploration and production waned.

“Consequently you have this real tight supply situation right now,”
Combs said.

Uranium sold for around $10 per pound through the 1980s and 1990s, but
an expected boom in nuclear power generation worldwide — including
possibly the United States, which hasn’t licensed a new plant in 30
years — has motivated a bull uranium market.

Last fall uranium sold for $56 per pound. It has steadied at $113 per
pound since April 9.

“Right now, in this market, a lot of suppliers are just offering
what’s called market price contracts, where they just want to peg
their (selling) price … to the future price in the market, even if
they’re only going out two or three months because they think prices
are going to go up a lot.”

“But this type of selling results in reduced price transparency with
few fixed-price offers on which to base market prices,” Combs said.
“Not a good situation. A futures market should result in fewer market
price offers and more fixed-price offers, improving transparency in
the cash market as well as generating a forward price curve in the
futures market. ”

With the price of uranium expected to go up before it settles back
down, Combs said the UXC/NYMEX product “would have been real useful
earlier on, because people … if they saw the price was going to go
higher and they’re willing to take that risk then that might have
stimulated production sooner and (the) price wouldn’t have gone up as
high. However, this product can be of considerable benefit in the
current market as it provides important hedging and price discovery
functions in a market that clearly is crying out for these functions.”

The future of the market after the NYMEX contracts begin is not known.
Speculators and miners — those affecting and setting the price now —
are likely to benefit, said James Finch, senior editor at
StockInterview.com, which specializes in detailed uranium market news.

“Everybody’s on a wait and see — except for the speculators,” Finch
told UPI. “Utilities see this as an opportunity to fix a price which
has right now gone completely out of control.”

Uranium data that market consultant TradeTech provided to
StockInterview.com show spot transactions are at the lowest year-to-
date level in a decade, dropping 65 percent in April.

Plus, Finch notes, there’s a $28 spread between long-term and spot
prices. And industry insiders tell him they’re looking for “real
sentiment” on prices, not the NYMEX price.

And one big factor remains: The uranium sector isn’t at a point to
link the NYMEX futures contract to the physical material. This
highlights the difference between trading a material used to make both
electricity and bombs and, say, corn or soybeans, since a federal
agency — the U.S. Nuclear Regulatory Commission — has to license a
facility merely to store uranium.

“One thing everybody agrees is there will be volatility,” Finch said.

{e-mail: energy [at] upi [dot] com}

http://www.marketwatch.com/news/story/uraniums-set-make-waves-futures/story.aspx?guid=%7B04534340-989E-43ED-B93D-1CEC856F39BF%7D

Uranium’s set to make waves in futures
New York Mercantile Exchange, Ux Consulting to launch uranium futures

By Myra P. Saefong, MarketWatch  /  Apr 27, 2007

SAN FRANCISCO (MarketWatch) — It’s hard to ignore any commodity
that’s seen a more than 1,000% price climb over the course of five
years, especially one that’s about to be traded on a futures exchange
for the first time.

Weekly spot prices for uranium stood at $113 a pound on April 23 —
that’s an 11-fold increase from the $10 it cost in 2002, according to
data from Ux Consulting Co. See the Web site for the latest price.

It’s no wonder that the uranium industry and potential investors are
all abuzz following an agreement between Ux Consulting and the New
York Mercantile Exchange, a unit of Nymex Holdings  announced last
week to introduce on- and off-exchange traded uranium futures products
on May 6.

(NMX :
nymex holdings inc com
Last: 122.84-0.40-0.32%
4:00pm 05/04/2007
NMX122.84, -0.40, -0.3% ) ,

“The fact is, there’s a need for a uranium futures market,” said Sean
Brodrick, a contributing editor to MoneyandMarkets.com, who has often
written about the uranium rally. Read his related Internet blogs.

“The way things are now, most uranium is sold under long-term contract
and some is sold under short-term contract,” he said. “But liquidity
can just dry up [and] it’s hard for utilities to make plans if they
don’t know what the real price of uranium is.”
“It’s about giving transparency to a very illiquid market,” said Kevin
Bambrough, a market strategist at Sprott Asset Management.

‘Since we are moving off the age of oil and into a nuclear era, it’s
about time we had some liquidity in the uranium market and some
visibility into pricing in outer months.’
– Kevin Bambrough, Sprott Asset Management

And Nymex has “correctly identified that the nuclear power industry is
undergoing a renaissance with tremendous growth ahead, as the world
struggles to deal with strong emerging market and Asian growth, while
facing the reality of peak oil and an energy-constrained world,” he
said.

Sprott predicts that “the combination of high energy prices, pollution
and global warming will compel the world to attempt to build as many
nuclear reactors as possible going forward,” said Bambrough.

“You can say what you want about nuclear power but you’re if worried
about global warming, one of the ways to deal with that is nuclear
power,” said Phil Flynn, a senior analyst at Alaron Trading.

“Since we are moving off the age of oil and into a nuclear era, it’s
about time we had some liquidity in the uranium market and some
visibility into pricing in outer months,” said Bambrough.
Limits to the trade

The lack of a public-trading platform for uranium as a commodity had
been a key complaint of prospective investors. Read a related archived
story.

“Nymex uranium futures will now make speculating in uranium fast and
efficient,” said Scott Wright, an analyst at financial-services
company Zeal LLC. And “the price of uranium could really jump from
today’s levels with this new flow of capital.”

The uranium futures products will be introduced next month on the CME
Globex and Nymex ClearPort electronic platforms, Nymex and Ux
Consulting said in a joint press release.
They will be financially-settled contracts and there are no
restrictions related to that, according to Randolf Warsager, vice
president of marketing at Nymex.

Traders won’t take possession of the commodity, but they can take
title of it and get some exposure to its price, he explained.
That separation from the physical market could end up being one of its
biggest flaws.

Gene Clark, chief executive at TradeTech, said the people who have the
most experience in uranium markets appear to be the most skeptical of
the futures exchange.

“They generally don’t see how such a market could take hold, given the
lack of the basic elements for such a market to evolve — a liquid
spot market and the absence of a linkage to the physical market for
the commodity,” he said.

Linkage to the physical market is “nearly universally the case in
other futures markets,” he said. And “with the Nymex futures market
being purely a financial instrument, it runs the danger of diverging
significantly from the physical market.”

As a commodity, it has been, in many ways, invisible to the public
over the years, said Clark. Uranium has traditionally been traded only
between end users, such as electric utility fuel managers and uranium
producers, he said.

“Private ownership of uranium has been legal in the USA only for the
past 40 years, and physically possessing it requires a license from
the various regulatory bodies,” Clark said.
And there is “really only one use commercially for uranium: the
generation of electricity,” he said. See TradeTech’s uranium
information site.

In a statement, Nymex Chairman Richard Schaeffer pointed out that
uranium itself is “uniquely positioned to act as a complement to both
our energy and metals product offerings.”
“Strictly speaking, it’s undeniably a metal, but Nymex views it as an
energy contract based on its primary use as fuel for nuclear
reactors,” said the exchange’s Warsager.

Nymex will initially offer futures contracts and when liquidity and
open interest support it, the exchange will launch options contracts
at the appropriate time, he said. Uranium’s set to make waves in
futures

That could take time. “When uranium futures start trading in May, they
will probably be as liquid as granite — much like natural-gas futures
were when they started out,” said MoneyandMarkets.com’s Brodrick.

“But once some volume picks up, we might be surprised who gets
involved — certainly utilities, hedge funds and professional
traders,” he said.

And with the Nymex doing this, “I wouldn’t be surprised to see other
exchanges do the same thing, much as gold and silver [exchange-traded
funds] are now offered around the world,” he said.

Benefits for a changing climate

At the moment, more than 500 companies claim to be exploring for
uranium, developing one or more uranium projects or producing uranium,
according to online news service StockInterview.com.

And the current offering of uranium-mining stocks presents investors
with “a large menu for their portfolios,” said James Finch, a senior
editor at StockInterview.com.

But as 2010 approaches, 90% of those companies will have
changed their name and/or moved into something new, so less than 25
uranium companies will likely become new miners by 2011, according to
Finch.

That could “hurt investors who are unfamiliar with the nuances of
uranium stocks and new to this sector,” he said.
StockInterview.com conducted a uranium-investor survey of a small,
random portion of its subscribers.

The survey found that the company’s subscribers expect the major
beneficiaries of the uranium-futures contracts to be the current
uranium miners and the near-term producers, said Finch.
“We expect very little futures trading from the retail investor. The
strong interest in futures will come from speculative funds, hedge
funds, some utilities and funds holding physical uranium,” said Finch.

And “the climate will change with the arrival of many hedge funds,”
which will likely employ multiple strategies using Nymex futures
contracts, he said.

Because of the limited number of current and near-term producers, “we
expect more liquidity and volatility in producers such as Cameco,
Denison, Uranium Resources, and Uranium One, and in near-term
producers such as Energy Metals, Uranerz Energy, and Strathmore
Minerals,” he said.

Sink or swim?

So what’s the reaction of the investment community?

Out of 364 responses to the StockInterview.com survey, more than 97%
said they were currently investing in uranium-mining stocks, but the
majority said they had no plans over the next 12 months to trade the
new physical uranium-futures contracts.
Only 6.9% said they plan to trade the contracts in the next year, and
almost 30% provided a “maybe” response.

Out of 359 responses, 83.8% said “yes” when asked if the futures
contracts will attract more interest in uranium, while 75% of 360
responses said the contracts will add more volatility to the uranium
price.

Even so, almost 67% believe the futures contracts will cause uranium
prices to go higher, the survey showed. See StockInterview.com’s full
survey results.

Whether the launch of futures contracts will be a disadvantage or
advantage to the uranium market depends on who you ask, said Sprott’s
Bambrough. “For those of us that are invested in uranium producers,
there is nothing more we’d like to see than the prices to continue to
trend higher or ‘spike’ higher,” he said.
As for uranium prices, there’s ‘long-term support for $100+ and …
today’s massive supply and demand imbalance allows a sizeable risk
premium to be imbedded in the price until significantly more uranium
is produced.’
– Scott Wright, Zeal LLC

Then again, “if you are a utility that hasn’t secured your uranium
requirements, it could be a nightmare,” he said.

“Uranium futures could create large price swings that will allow not
only for bigger up-legs, but sharper corrections,” warned Zeal’s
Wright.

But, given that the “uranium market has been disjointed in the past,
having a contract is a viable price mechanism and would be a very
positive thing,” said Alaron’s Flynn. It has the “potential to be very
successful contract.”

Indeed, Wright predicts the futures contracts will be a “good thing
overall — allowing a more stable and liquid market for producers and
consumers to better manage their businesses and hedge risks, as well
as allow the participation of a wider spectrum of investors.”

And as for uranium prices, there’s “long-term support for $100+,”
Wright said, and today’s massive supply and demand imbalance “allows a
sizeable risk premium to be imbedded in the price until significantly
more uranium is produced.”

{Myra P. Saefong is a reporter for MarketWatch in San Francisco.}

http://redhotresources.blogspot.com/search/label/uranium
http://www.marketwatch.com/News/Story/uranium-hot-commodity-thats-getting/story.aspx?guid=%7B2A8D6FAE%2D560D%2D4F95%2D9637%2DF4D2FFA4BA28%7D