Uranium Week: All Quiet

This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP

By Greg Peel

The spot uranium market was a-buzz at the beginning of last week with anticipation of what impact coincident news of supply disruptions at two Australian-owned uranium mines might have on prices. Would those utilities known to be quietly contemplating purchases suddenly decide they better get a move on?

Two weeks ago BHP Billiton ((BHP)) suffered a failure at the processing mill of its Olympic Dam mine in South Australia which is likely to put the mill out of operation for up to six months and result in 3-4mlbs less uranium production. At the same time, Rio Tinto ((RIO)) announced a fire at its Rossing recovery plant in Namibia which has not interrupted production, but investigations may lead ultimately to production plans being impacted.

These disruptions are no minor story in the global uranium market, thus industry consultant TradeTech was surprised when an anticipated burst of urgent buying did not eventuate last week, and indeed the market went very quiet. Early in the month the spot market was registering substantially higher levels of activity than in the same month last year, but last week saw only three transactions conducted totalling 500,000lbs of U3O8 equivalent.

It seems the buyers and sellers are more content to sit on the sidelines until more detail is forthcoming with regard constrained supply. TradeTech also notes that while a number of utilities are considering purchases, they are currently pursuing off-market avenues directly with suppliers. Suppliers, on the other hand, have pulled back offer prices in anticipation of strengthening demand.

TradeTech’s weekly spot price indicator did nevertheless manage to rise US15c last week to US$38.25/lb. One transaction was reported in the term market, and TradeTech’s term price indicators remain unchanged at US$41.25/lb (mid) and US$50.00/lb (long).
 

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms