Weekly Reports | Dec 07 2021
Omicron concerns led to a drop-off in spot uranium activity last week and a subsequent price plunge on lack of interest.
-Uranium spot volumes plunge after a record November
-Omicron fear rattles financial speculators
-Spot price falls on lack of buyers
By Greg Peel
Industry consultant TradeTech’s uranium spot price indicator dropped -US$2.00 over last week to US$45.00/lb. It was not as a result of a rush of selling, but a drying up of buyer interest.
We recall that covid in its earlier forms caused uranium production shutdowns from Canada to Kazakhstan, on concerns for worker safety and the safety of the small communities nearby remotely-located mines and processing plants, from which most workers are drawn.
While shutdowns should imply supply shortages and higher prices, TradeTech notes that since the arrival of the Sprott Physical Uranium Trust into the spot market, financial speculation in uranium has amped up, supported by net zero emission targets and nuclear power’s “green” credentials.
(The jury is out on nuclear’s “greenness”. See last week’s report. Full link below.)
Hence when omicron sparked a general sell-off in financial markets in a swift risk-off trade, uranium was not immune. It was not so much of a panic sell-off but rather a withdrawal of buying interest, as evidenced by spot volume dropping to 850,000lbs U3O8 equivalent after November saw a record 8.9mlbs changing hands.
Uranium term markets trade on the more fundamental basis of end-user utility demand and producer supply, but the drop in the spot price did have utilities sniffing around for a bargain in the off-market, although by Friday no deals were agreed upon, TradeTech reports.
It’s not quite the end of the uranium world, noting the spot price is up 48% year to date and 52% year on year.
November featured record spot volumes but also heightened volatility. The month opened with a price of US$43/lb and then dropped to US$42 before Sprott moved in again, drawing in other speculators and pushing the price up to US$47 before the omicron announcement. The month closed mid-last week at US$45.50/lb.
Utility interest was evident in the spot market last week but on a limited basis, TradeTech notes. Utilities are typically offered lower prices off-market than speculators on market, as producers and intermediaries like to maintain good relations with their “real” buyers.
Despite all the action in the spot market, terms markets were quiet in November with only two transactions reported. TradeTech’s mid-term price indicator has nevertheless risen to US$44.00/lb at end-November from US$43.75 at end-October.
TradeTech’s long term price indicator remains unchanged at US$45.00/lb.
If we can take Wall Street’s performance last night – rebounding solidly after Dr Fauci noted omicron is so far appearing to be less severe than delta – and assume that as a proxy for financial market risk appetite, then it will be interesting to see how the spot uranium price responds this week.
Uranium Week: Clean And Green?: (https://www.fnarena.com/index.php/2021/11/30/uranium-week-clean-and-green/)
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