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Uranium Week: Playing To Script

Weekly Reports | Dec 18 2018

December typically sees a pre-Christmas squaring up among uranium market participants. Last week was no exception.

-End of year squaring
-Spot price unchanged
-Market in balance

By Greg Peel

In this, FNArena’s final Uranium Week for 2018, we note industry consultant TradeTech’s weekly spot price indicator remains unchanged at US$29.00/lb. This is despite solid volume of 1mlbs U3O8 equivalent changing hands last week, including one contract for 500,000lbs.

TradeTech notes as we approach year-end, it is typical to see sellers moving to offload any unwanted material remaining in their accounts. This suggests an opportunity for buyers to pick up some cheap inventory, but for the fact it’s also a period in which utilities with money left in their annual budgets to jump in for some late buying.

As the unchanged spot price suggests, that historical offset was evident last week.

The spot price had risen 23% year to date by the end of last week, albeit 44% above the US$20.10/lb low seen earlier in the year. Utilities have lined up with late orders that could see reasonable volume this week as well.

Market Balance

Industry news for the week included the release of the biennial “Red Book”, published by the Nuclear Energy Agency and the International Atomic Energy Agency.

The Red Book suggests there are sufficient uranium resources to meet projected requirements for the foreseeable future. In other words, in the near term at least, the world has enough uranium to satisfy demand. But it should be noted that at present, a lot of those resources are not currently being exploited, with many a mine operating at reduced rates or placed into care & maintenance.

The Red Book cautions that “significant investment and technical expertise will be required to ensure these uranium resources can be brought into production in a timely manner, including from mines currently under care & maintenance.

Thus a balanced market from a resource perspective does not necessarily imply a balanced market from an immediate supply/demand perspective.

TradeTech’s term market price indicators will remain at US$30.00/lb (mid) and US$31.00/lb long until reassessed at end-December.

Uranium Week will return in January.

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