Uranium Week: Anxious Buyers

Weekly Reports | May 10 2022

The push by end-users to secure reliable term uranium supply continues ahead of any potential sanctions on Russian exports.

-Spot uranium market remains beholden to volatility
-Utilities actively seeking reliable supply
-Supply costs are rising

By Greg Peel

Continuing uncertainty over potential sanctions on Russian uranium exports is leading more utilities each week having a diminished appetite for Russian nuclear fuel, industry consultant TradeTech reports.

These concerns have led buyers to not wait around but to pursue alternative, more secure sources of supply. While several industry participants have expressed concern over the future reliability of existing transport routes originating from the Port of St. Petersburg, threats to logistics from potential sanctions are just one of many concerns driving buyer behaviour currently.

Recognition of the Russian government’s strategy to secure its own energy independence while driving energy scarcity elsewhere in order to exert its political influence is accelerating interest among many uranium buyers in reliable domestic production, such as in the US.

With volatility ongoing in financial markets in general, last week saw buyers and sellers in the spot uranium market staring at each other across the bid-ask spread, reluctant to move. Such volatility has led the influential Sprott Physical Uranium Trust to stall its buying for now, so it was left to other participants to break some of the deadlock.

By week’s end five transactions were completed totalling 500,000lbs U308 equivalent, with prices rising successively during the week. TradeTech’s weekly spot price indicator is up US$1.75 at US$54.75/lb.

In Good Time

The term uranium market remains active with utilities pursuing a variety of avenues to hedge their portfolios against potential supply interruption of deliveries from Russia, TradeTech reports. Utilities in Europe and the US were particularly active in April as they pushed forward with commitments to non-Russian supply sources.

Due to elevated volatility, utilities have all but abandoned the uranium spot market.

Momentum continues to grow, particularly in the US, for sanctions on Russian nuclear fuel imports. The Biden Administration has indicated it is working on a "plan," but details of that plan are still unknown.

Thus US utilities are actively planning for the unexpected, including potential challenges related to transportation, corporate or banking policies, in order to ensure material is securely delivered at the most reasonable cost possible.

With transportation and labour costs steadily growing, utilities are also carefully vetting longer term suppliers to ensure their reliability in delivering product over contracted time periods.

TradeTech’s term market price indicators remain at US$61.00/lb (mid) and US$52.00/lb (long).

Uranium companies listed on the ASX:

ASX CODE LAST PRICE % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 0.4100 0.00% $0.64 $0.00
BMN 0.2100 0.00% $0.44 $0.00
BOE 2.3000 0.00% $3.10 $0.00 $3.200 39.1%
ERA 0.3000 0.00% $0.58 $0.00
PDN 0.7300 0.00% $1.12 $0.00 -75.7 $1.000 37.0%
PEN 0.2000 0.00% $0.35 $0.00
VMY 0.2000 0.00% $0.33 $0.00 $0.210 5.0%

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