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Uranium Week: End-Of-Year Buying?

Weekly Reports | Nov 12 2019

A sudden jump in buyer interest, and subsequently the uranium spot price, begs the question whether utilities have already begun their traditional buying ahead of year-end.

-Spot uranium volumes and prices jump
-Year-end buying?
-President Trump's
Working Group report pending

By Greg Peel

The week before last brought the announcement of a 90-day extension to waivers of US sanctions on Iran for companies working in Iran's civil nuclear industry. On that news, the uranium spot price jumped US45c.

But given sellers had become increasingly desperate as spot prices drifted lower over recent months, the price was quickly slapped back -US35c.

Last week was nevertheless different. As buying interest from utilities continued to pick up, sellers saw the opportunity to start backing off their offers. By week's end seven spot transactions had been completed totalling 2.2mlbs U3O8 equivalent, industry consultant TradeTech reports.

The consultant's weekly spot price indicator has risen US50c to US$24.65/lb.

Activity also continues to increase in the term uranium markets, TradeTech reports. Several utilities entered the market last week and continue to await or evaluate outstanding offers. A total of over 4mlbs U3O8 equivalent was committed by suppliers to various parties for mid and long term deliveries via off-market discussions.

Getting in Early?

Does the pick-up in activity suggest recent market stagnation has given way to traditional year-end buying, which sees utilities shoring up inventories ahead of the northern winter?

It's too early to tell, TradeTech believes. The aforementioned waivers may have been extended but the market awaits the recommendations of President Trump's Working Group, due on November 14.

Those recommendations will potentially impact on the uranium supply-side of the market and/or the demand-side of the market to the detriment, or benefit, of either/or. However, given the only result of mandated sourcing of US material, or tariffs, or some other "national security" action can be one of robbing Peter to pay Paul (neither miners nor power generators can remain commercial at current prices), then there is no obvious recommendation the Working Group might make.

There also remains the possibility that having been extended once, the deadline for those recommendations to be delivered could be extended further. The prior extension was given when US-China trades talks hotted up again, presumably distracting the White House, albeit it was the Working Group and not the president who required the extension.

Clearly trade talks are again reaching a crescendo, so maybe November 14 will not be timely for other issues to be considered.

As always, it's a waiting game.

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