The New York Mercantile Exchange (Nymex) will begin trading the first uranium futures contract on May 7.The cash-settled contract will be available on the Chicago Mercantile Exchange’s Globex and Nymex’s Clearpoint electronic platforms. The contract size will be 250 pounds, and it will be listed for 36 consecutive months.
Nymex chairman Richard Schaeffer said of the launch: “We are excited to introduce uranium futures contracts and to provide the industry with a transparent price-discovery mechanism.”
Uranium is not currently traded on any exchange, and spot prices based on industry contracts have surged in recent years, from a low of $7 per pound of uranium oxide in 2001 to $113 this month, according to Jonathan Hinze, director of international markets and data analysis at Roswell, Georgia-based Ux Consulting, which calculates a benchmark weekly price. Nymex has signed a 10-year deal with Ux Consulting to price the new contracts.
This contract will offer hedge funds and institutional investors a way to hedge against rising uranium prices in the face of growing demand from nuclear power stations. “Hedge funds became interested in 2004 and currently hold 20 million pounds of uranium. This properly regulated futures contract should offer price transparency and a better understanding of hedge funds’ role in this market,” said Hinze.
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