Weekly Reports | Jan 18 2022
With no disasters happening in Kazakhstan, spot uranium traded inside a narrow range last week, as utilities are considering risk-mitigating strategies.
-Last week spot uranium traded inside a narrow range
-Traders and financial participants accounted for all 17 spot market transactions for the week
-TradeTech reports utilities are more risk conscious and looking into risk-mitigating strategies
By Rudi Filapek-Vandyck, Editor FNArena
With investors keeping a close eye on news and developments from Kazakhstan, spot uranium traded side-ways throughout the week ending on Friday, 14th January 2022. Industry consultant TradeTech reports its daily spot price hardly moved during the week, trading within a narrow range of US$45.50/lb to US$50/lb.
By the end of the period, spot U3O8 had lost -US10c to US$45.75/lb from the previous week's close.
Total transaction volume grew to 17 transactions involving more than 2.3m pounds U3O8 equivalent compared with 1.8m for the previous week.
Traders and financial entities
One buyer that was in particular active throughout the week was the Sprott Physical Uranium Fund (SPUT), purchasing a total of 1.2m pounds to take its total inventory to nearly 44m pounds U3O8.
As for the remainder of the week's activity, TradeTech reports traders and financial entities purchased whatever SPUT did not, indicating current market dynamics for uranium are almost exclusively driven by financial entities.
Other events that had the industry's attention were an announcement by Kazakh president Kassym-Jomart Tokayev that the country's new government should secure higher taxes from the local mining sector. Major uranium producer Kazatomprom hasn't excluded encountering some headwinds from local turmoil, but so far no interruptions have been reported.
Meanwhile in Europe, the European Commission has extended the deadline for experts to contribute to a consultation on whether to classify nuclear energy and natural gas in its sustainable finance taxonomy.
In the UK, the government has committed to a key role for nuclear power within the UK's future energy mix, along with wind and solar, as it seeks to reach its target of net-zero carbon emissions by 2050.
Utilities considering risk-mitigation
TradeTech also reports utilities had already started engaging in risk mitigating strategies before social unrest roared in Kazakhstan. Price volatility, along with increasing prices and production costs increases, is driving several utilities to re-examine their contract portfolios, reports the industry consultant.
The greatest sources for portfolio risk currently stem from inflation, future uranium prices, and geopolitical risk. As a result, TradeTech reports several utilities are evaluating when to enter the market for mid- or longer-term supply commitments in an effort to provide insulation from price volatility.
TradeTech's mid-term price indicator remains unchanged at US$43/lb while its long-term price indicator sits at US$45/lb. Both are unchanged since late December.
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