Uranium Week: Demand Building

This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN

By Greg Peel

Uranium market participants gathered in Washington last week for the annual Nuclear Fuel Supply Forum but this proved no distraction to the buying interest that has been building in early 2015. Utilities, intermediaries, producers and speculators all expressed interest in buying spot uranium last week, forcing nervous sellers to back off on their offer prices, reports industry consultant TradeTech.

While five transactions totalling 500,000lbs of U3O8 equivalent were concluded last week, the reality is the price gap between keen buyers and willing sellers has widened further. TradeTech has lifted its weekly spot price indicator by US75c to US$36.75/lb.

Several utilities are also preparing to enter the mid and long term uranium markets, TradeTech notes, which is likely to affect a flow-through to spot market prices as intermediaries seek to gather product for sale into term contracts. Three transactions totalling 600,000lbs of U3O8 were concluded in the term market last week. TradeTech’s term price indicators remain unchanged on US$39.00/lb (mid) and US$50.00/lb (long).

Australian-listed uranium producers were in the spotlight last week as the local resources sector quarterly reporting season rolled on. There are smiles beginning to return at Paladin Energy ((PDN)), where production at the company’s Langer Heinrich mine in Namibia increased 27% and revenues increased 79% on the previous quarter. Paladin is also conducting a feasibility study ahead of possibly reopening its Kayekelera mine in Malawi, which was placed into care & maintenance last year due to weak uranium prices and Paladin’s burgeoning debt issues.

Uranium production also increased at BHP Billiton’s ((BHP)) Olympic Dam mine, rising 24% for the quarter and 7% year on year. Rio Tinto ((RIO)) otherwise bucked the trend, seeing 36% lower production at its Rossing mine in Namibia, in response to low prices, and minimal production from majority-owned Energy Resources of Australia’s ((ERA)) Ranger mine due to leach tank issues through 2014.
 

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