While Urenco benefited from the strong dollar, this expansion probably had more to do with a restructuring of the company that centralized management decisions. As long-term contract prices dropped, spot inventory holders had to reduce prices in order to compete with these supplies. They also had to compete with primary enrichers for spot sales opportunities, especially those that resulted from utilities exercising quantity flexibility provisions under existing long-term contracts. By and large, developments in the long-term contract market dictated spot price trends, as only a small percentage of overall enrichment volume is transacted on the spot market. Major Enrichment Market Developments Figure 1.
Prices are in nominal dollars.
However, USEC's privatization had a larger impact on the uranium market due to the transfer of natural uranium inventories from DOE than it did on the enrichment market. EUP contracts are favored by some utilities because they reduce holding costs and contract administration efforts. Because of the availability of these supplies as well as a demand for them, EUP commerce has increased over the past year, both with respect to spot and long-term contracts. There were reports that although the physics of atomic laser separation were quite effective, the engineering obstacles associated with handling vaporous uranium metal may have been too difficult or costly to overcome. The effectiveness of this process at commercial scale is unknown at present.