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Uranium Week: Taking A Breather

Weekly Reports | May 12 2020

This story features DEEP YELLOW LIMITED. For more info SHARE ANALYSIS: DYL

After an historic monthly price rise in April, May opened with the spot uranium market calming down.

-Calm descends on uranium market
-Virus hitting global energy demand
-US production crashes

By Greg Peel

In the month of April, the spot uranium price rose almost 24% to mark the largest monthly increase in almost thirty years. In six weeks, the spot price rose 41%, being the fastest rise since 2007. Last week activity settled down.

Indeed, for the first three days of last week, nothing happened, industry consultant TradeTech reports. In the last two days, eight spot market transactions were concluded totalling 800,000lbs U3O8 equivalent. It was a more "normal" week of activity, but well down on volumes of the prior six weeks.

TradeTech's weekly spot price indicator fell -US10c to US$33.80/lb.

Producers and traders remained prominent on the buy-side, with limited interest from utilities. Traders and speculators were the main sellers.

Demand Side

The virus and associated lockdowns are expected to drive global energy demand down -6% in 2020 according to the International Energy Agency's Global Energy Review, based on data accumulated over 100 days. Electricity demand is expected to fall -5% to mark the biggest fall in 70 years.

Carbon emissions are expected to fall -8%, positioning renewables for unprecedented growth.

Electricity use declined an -25% per week during the period to April 14 in countries with full lockdowns. Declines in demand, and a small number of reactor outages, drove nuclear power output down -3% in the March quarter.

The EIA suggests a rapid recovery from virus restrictions could put some reactor projects back on pace, taking the expected 2020 decline in nuclear output to just -1%.

The uranium term market was also quiet, again, last week, TradeTech reports. Only a few small transactions were concluded involving late 2021 delivery. Term market demand is currently limited as utilities attempt to manage virus risks at their operating facilities, while others are in the midst of refuelling outages.

TradeTech's term price indicators remain at US$37.50/lb (mid) and US$39.00/lb (long).

Supply Side

The US Energy Administration last week noted that the March quarter saw the four operating US facilities producing 8098lbs of U3O8 equivalent, down -79% from the December quarter.

Kazahstan's state-controlled Kazatomprom reported production of 13.6mlbs in the March quarter, down -12% from the December quarter and -1% from the previous March quarter.

On the exploration side of the industry, ASX-listed uranium developer Deep Yellow ((DYL)) reported encouraging results from metallurgical test work at its Tumas Project in Namibia. The company will now begin metallurgical testing on the diamond core composites to confirm the positive outcomes returned from the drill sample test work at the project.

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