Uranium Week: Price Jump

Weekly Reports | Jul 31 2018

The spot uranium price saw its biggest weekly rise year to date last week but given the reasons behind it, can it be sustained?

By Greg Peel

There is something rather Heller-esque about a 5% jump in the share price of Canadian uranium producer Cameco last week.

In delivering its June quarter results release Cameco announced that the previously temporary suspension of operations at its McArthur River mine and Key Lake mill will now be indefinite. While the miner is maintaining strong cash flows from selling off stockpiles and focusing on operating efficiencies, the uranium market remains in the doldrums, hence the announcement.

In Heller’s iconic novel, American alfalfa farmers are subsidised for not growing alfalfa. The more alfalfa they don’t grow, the greater the subsidy.

Not only did Cameco’s share price jump 5% on the announcement, the uranium spot price jumped US$1.50, or 6.2%, on the day. This is understandable – less supply implies higher prices – but given the supply constraint is all about low prices, it’s a circular argument.

Over the week, the spot uranium price rose US$2.10 or 8.8% to US$25.85/lb, to mark the biggest weekly jump in 2018 to date. The increase was nevertheless not about notably increased demand from end-users.

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