Weekly Reports | Nov 02 2021
As the spot uranium price fell -10% last week, Cameco reported a quarterly net loss on lower revenue.
-Uranium spot price falls -10% for the week
-Cameco reports quarterly loss
-Record-breaking spot volume over last three months
-London-listed Yellow Cake PLC makes further uranium investment
By Mark Woodruff
TradeTech's monthly spot price Indicator was little changed over the month of October, increasing by US$0.8/lb from September 30 to close out October at US$43/lb, the highest level the Indicator has reached since January 2013.
Thus far in 2021, the price has increased 45%; it has risen over 76% in the last 24 months. The October 31 level is nearly 43% above the 2020 average of US$30.15/lb.
Recent months have shown historic levels of volatility, with weekly swings of 5-20% in the spot price becoming more common since the introduction of physical-holding-fund buying, in addition to increased trader and producer activity in markets this year.
Record-breaking volume in the spot uranium market in the past three months is directly connected to the launch of the Sprott Physical Uranium Trust (SPUT) in August, notes independent consultant TradeTech. Total volume accumulated by SPUT alone now accounts for a total of 16.9mlbs.
A total of 72 transactions, representing over 12.5mlbs U3O8 equivalent, were recorded for the month of October, a total that has only been surpassed by the prior two months of August (13.2mlbs) and September (14.5mlbs) this year.
Mid-term and long-term uranium prices remained fairly stable in October in spite of the wild swings witnessed in the spot uranium price.
TradeTech's term price indicators ended October at respectively US$43.75/lb (mid) and US$45/lb (long). Both are unchanged over the past month as well as for the past week. The lack of predictability in the spot uranium price has created a desire by utilities to insulate themselves from price volatility in their term contracting, reports TradeTech.
Cameco Corp, the world's largest publicly traded uranium company, last week reported it was still loss-making during the third quarter ended September 30. Cameco's average realised price for uranium fell to US$32.20/lb compared to US$33.77/lb in the same quarter last year.
In addition, with production well below sales commitments, the company has been purchasing uranium to meet committed sales and to maintain a working inventory. For 2021, Cameco expects the average purchase price to be about US$42.50/lb, which it notes is approximately US$11.50/lb higher than the production costs at Cigar Lake over the past two years.
Cameco is forecasting uranium production of up to 6mlbs (from owned and operated properties) and purchases of 11-13mlbs for the full year 2021. It expects to deliver 23-25mlbs this year.
Tim Gitzel, Cameco’s President and CEO noted that “with McArthur River and Key Lake in care and maintenance, we are not at the regular tier-one run rate of our business”.
Elsewhere, London-listed Yellow Cake plc has announced an equity raise of $150m to purchase 3mlbs of uranium.
CEO Andre Liebenberg noted “The long term outlook for the uranium price remains strong, driven by the more positive demand outlook and ongoing supply constraints, causing the supply deficit to grow every year. We continue to seek further opportunities for value accretive opportunistic uranium purchases at an attractive price”.
Uranium weekly pricing
Meanwhile, TradeTech's Weekly Spot Price Indicator ended on the same business day as the monthly Indicator. The closing price of US$43/lb was down -10% or US$4.75/lb from the previous week. The primary buyers were traders and financial entities.
There were around 1.5mlbs U3O8 traded last week, compared to 2.7mlbs in the prior week.
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