Uranium Week: Buying Interest Remains Absent

This story features ENERGY RESOURCES OF AUSTRALIA LIMITED. For more info SHARE ANALYSIS: ERA

By Greg Peel

Suppliers are becoming increasingly bearish on the outlook for uranium prices, industry consultant TradeTech suggests. Last week was another in which traditional spot market sellers cut prices further as the week progressed in order to find any buying interest. A total of five transactions totalling 800,000lbs of U3O8 equivalent were reported and TradeTech’s spot price indicator ended the week down US60c to US$34.00/lb.

There has a been a lot of talk of potential uranium supply sanctions being imposed against Russia in the wake of the Crimean annexation, but last weekend’s diplomatic discussions between Presidents Putin and Obama may go some way to allaying those concerns. The British government is nevertheless said to be reviewing an agreement signed last year with Russian state-owned Rosatom which would have seen the Russians building nuclear reactors in the UK.

In supply-side news, Duke Energy in the US has asked for bids for 75 nuclear fuel assemblies which are being sold now the company has decided to retire rather than repair its Crystal River plant, constructed in 1977. While Duke will only sell to federally licenced US nuclear power plants and/or nuclear fuel fabricators, the implication of the offer is there is yet more uranium needing a home.

Energy Resources of Australia ((ERA)) has been building a large uranium inventory since its Ranger mine was shut down due to a leak in a leach tank but processing operations should begin again soon now the leaking tank has been removed. ERA is holding enough inventory to meet all sales commitments in the first half of 2014.

And just to add to global oversupply, Australia’s Four Mile Mine in South Australia, granted government approval several years ago to become the country’s fifth uranium mine, is expected to commence production in April, subject to regulatory approval.

There is at least some good news on the demand side. Unit 1 at China’s Yangjiang nuclear plant in Guangdong has begun operation. Yangjiang is the largest nuclear construction site in the world with a further five units under various stages of construction.

TradeTech reports no transactions in the term market last week. The consultant’s term price indicators remain at US$37.75/lb (mid) and US$50.00/lb (long).
 

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