Weekly Reports | Sep 21 2021
As the weekly spot price hits a nine year high, industry consultant TradeTech expects further upward price pressure.
-Spot price increases 53% over the last four weeks
-New broker research on Silex Systems
-Uranium spot price rises over 18% for the week
By Mark Woodruff
For the first time since July 2012 the uranium market has seen a spot price surpass the US$50/lb price level.
The Weekly Spot Price Indicator calculated by industry consultant TradeTech rose to US$50.50/lb last week, up US$8.00/lb from the week before. The Indicator has risen 53% over the last four weeks and currently sits 84% above its 2021 low point of US$27.40 set in mid-March.
The average Weekly Spot Price Indicator in 2021 is US$31.71/lb, US$2.00/lb above the 2020 average.
A total of nearly 4.7mlbs U3O8 traded hands last week, up from 3.8mlbs in the prior week, with the Sprott Physical Uranium Trust (SPUT) accounting for approximately 75% of purchases.
TradeTech expects further upward price pressure as SPUT alone has taken approximately 10mlbs out of active spot supply. Sellers are cautiously raising offer prices, while also ensuring they lock in some business at current prices.
TradeTech draws a comparison between the lithium and uranium markets. They both endured a steep price decline from oversupply and prices that stabilised for a time below the cost of new and returning production. Now, investors foresee a protracted supply deficit in the face of increasing demand.
TradeTech's term price indicators are US$35.75/lb (mid) and US$35.00/lb (long).
The increase in the spot uranium price is impacting upon those term uranium contracts with a market-related component, which incorporate the spot price at the time of delivery.
As a result, some utilities are faced with an unexpected increase in their projected fuel costs and cash flow. According to TradeTech, a few utilities are fast-tracking their off-market discussions with suppliers in order to lock in additional quantities while the term uranium price still lags behind the spot uranium price.
Last week Shaw and Partners initiated coverage on ASX-listed Silex Systems ((SLX)) with a Buy rating and price target of $2.60. The company is focused on the development and commercialisation of its SILEX laser isotope separation technology.