Uranium Week: Empty Market

Weekly Reports | Aug 06 2019

Traders are the only ones playing the uranium market at present as the August summer break begins.

-Court appeal against Yeelirrie rejected
-Utilities remain on sidelines
-Uranium prices going nowhere

By Greg Peel

News from the Australian uranium market last week is that the Western Australian Court of Appeal has dismissed an attempt to overturn state approval for the Yeelirrie project on environmental grounds. The WA Minster for the Environment approved the project, owned by Canada's Cameco, in January 2017.

An initial attempt to block the decision was overturned by the WA Supreme Court in February 2018. The project has since gained approval from the federal government.

"Cameco Australia is committed to minimizing environmental impacts from its projects and we have duly followed the regulatory process, ensuring that the assessment was thorough and transparent," said Cameco Australia's general manager last week. "We will continue to work with the local community."

It's all academic of course. A decision by Cameco to advance Yeelirrie "will depend on market conditions". Market conditions are currently keeping one of Cameco's major operations in Canada, McArthur River, in mothballs until prices improve.

In the meantime, it remains cheaper for Cameco to make good on its delivery contracts by buying material in the spot market. This would leave the producer as one of few buyers in the market, outside of traders, given utilities and financial investors remain absent.

For utilities it's a matter of out from under one market overhang, being section 232, and into another one, being submissions to the US government's Working Group, which is investigating the state of play in the whole US nuclear cycle.

For financial investors it would be a matter of a stalled market.

A pick-up in activity is also now unlikely in the short term as August is typically a quiet holiday period during the northern summer.

Going Nowhere

For the month of July, industry consultant TradeTech reports 29 transactions totalling 3.6mlbs U3O8 equivalent. Traders remain the primary participants on both the buy and sell sides.

The week ending last Friday saw a mere two transactions for a total of 250,000lbs.

TradeTech's spot price indicator ended July at US$25.25/lb, up from $24.50/lb at the end of June. The indicator also closed last week at US$25.25/lb, down -US25c from the week before.

The spot price has now oscillated between US$25.25 and US$25.50 for three weeks running, which rather sums up current market conditions.

TradeTech's term price indicators remain unchanged from end-June, at US$28.50/lb (mid) and US$31.00/lb long.

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