Uranium Week: Activity Remains Brisk

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Solid volumes continue to be traded in the uranium spot market while term market interest continues to show signs of life.

-Traders pushing up spot prices
-Utilities returning to term markets
-BHP shuts down Olympic Dam uranium production

By Greg Peel

Activity in the uranium spot market was once again brisk last week, with industry consultant TradeTech reporting 1.4mlbs U3O8 equivalent changing hands over the week. Traders dominated the buy-side although utilities were also involved. Once again there was a disparity in pricing dependent on delivery location, with most transactions last week requiring Canadian delivery.

TradeTech’s weekly spot price indicator has risen US50c to US$26.50/lb.

There were four transactions concluded in term markets last week, underscoring the perception the long-anticipated pick-up in utility purchases may finally have arrived. At 400,000lbs in total the volume is not much to speak of, but there is currently a proposal out from one utility seeking 2.8mlbs over 2019 and another long term delivery proposal for 10.8mlbs.

TradeTech’s term price indicators remain at US$29.50/lb (mid) and US$31.00/lb (long).

Involuntary Outage

The uranium market has become used to miners announcing operational shut-downs/suspensions or production cut-backs over the past few years, in light of uneconomical prices, but a shutdown at BHP’s ((BHP)) Olympic Dam mine in South Australia, announced last week, is not intentional.

BHP released its full year earnings results last week and the company disclosed a technical failure at Olympic Dam which is being addressed, but production may cease for up to eight weeks.

Olympic Dam produced 2.5mlbs U3O8 in the June quarter, in line with the March quarter, but up 52% from the June quarter 2017. Over FY18, BHP reports 7.4mlbs production, down -8% from 2017.

The technical problem comes just months after BHP completed a US$255m upgrade at the site.

On the demand side, both China and Russia fired up new reactors last week.

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