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Uranium Week: Eight-Month High

Weekly Reports | Nov 26 2019

Despite caution surrounding Iran sanctions waivers, and other ongoing uncertainties, the spot uranium price last week reached US$26.00/lb for the first time in eight months.

-Spot uranium hits eight-month high
-One waiver on Iranian sanctions terminated
-Buying continues unabated

By Greg Peel

Late last month the White House extended for ninety days waivers on Iranian sanctions for those companies assisting Iran in its civil nuclear ambitions. While the extension upset some Republicans, the thinking is better to have eyes and ears inside Iran's nuclear industry than to try and monitor proceedings from outside.

Had the waivers not been extended it would have meant sanctions on European, Russian and Chinese companies working in Iran, leading to up to 20% of US nuclear fuel imports being withdrawn.

Which, one presumes, would have resulted in a higher uranium price in the US. Yet the global spot uranium price rallied on the news, and has been rallying ever since, as utilities decided it was time to step into the market to purchase required inventory, with year-end approaching. An uncertainty had been removed, at least for ninety days.

The uranium price rallied again two weeks ago, gaining momentum as producers joined in the newfound buying spree, likely fearful of missing out.

Last week saw the spot price rally yet again, with industry consultant TradeTech's weekly spot price indicator rising US75c to reach US$26.00/lb for the first time in eight months. But somewhat of a paradox has emerged.

Just Buy

Last week the White House terminated one of the four sanction waivers, having learned from the International Atomic Energy Iran has recommenced uranium enrichment at its Fordow plant. "There is no legitimate reason for Iran to resume enrichment at this previously clandestine site," US Secretary of State Mike Pompeo told reporters on November 18.

Waivers for companies involved with the Bushehr power plant remain in place for now, subject to reassessment in January.

So it appears the market is prepared to buy uranium when waivers are extended and buy uranium when waivers are terminated and all this despite the ongoing uncertainty of it only being a ninety-day extension, not to mention a Working Group report that is supposedly now sitting on the president's desk as yet unread, and no news on the Russian suspension agreement.

Maybe the market has just decided it's time to buy uranium. December typically sees year-end buying ahead of the northern winter, so perhaps this year the buying has come early and producers are vying with utilities to secure material.

A total of 1.8mlbs U3O8 equivalent changed hands officially last week, TradeTech reports, although several off-market transactions were also concluded. The spot price is now up almost 8% for the month.

Utilities were also active in term markets this week, TradeTech reports, with several concluding transactions either as a result of formal tenders or off-market negotiations. TradeTech's term price indicators remain at US$27.50/lb (mid) and US$31.00/lb (long).

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