Weekly Reports | May 17 2022
While volatility grips global financial markets, utilities continue to ignore the uranium spot market and concentrate on securing term supply contracts.
-Spot market hit by general volatility
-Term market actions remains buoyant
-Signs of increasing short and long term demand
By Greg Peel
Global financial markets remained volatile last week on fears of central bank inflation-busting sending economies into recession – more particularly Europe, which is suffering most from Ukraine fallout, but also the US, while Chinese lockdowns weigh on the world’s second largest economy.
Given uranium has become a plaything of financial speculators, any widespread financial market fear is finding its way into the spot uranium market. Industry consultant TradeTech’s weekly spot price indicator fell -US$4.75 last week to US$50.00/lb.
Only five transactions were completed in the spot market last week, totalling 500,000lbs U3O8 equivalent.
While TradeTech’s spot price indicator has declined over -22% in the last month, it remains up 9% so far in 2022 and is up approximately 64% from a year ago.
Conspicuous in its absence last week was speculator-in-chief, the Sprott Physical Uranium Trust, which having been responsible for the bulk of the buying coming into 2022 has not been seen in the market since the end of April.
Weakness in spot market pricing is not, however, being reflected in uranium term market pricing. Actual uranium users are not interested in playing spot market games, rather they are urgently focused on securing reliable supply across mid and longer term contract periods, with the threat of bans on Russian uranium exports still looming large.
Utilities, like everyone else, are also facing increasing escalation in the cost of fuel, supplies, labour and material in order to operate their plants.
More than 1mlbs of uranium was contracted in the mid-term delivery window by a variety of parties last week, TradeTech reports. The consultant’s mid-term price indicator remains at a stubborn premium over spot at US$61.00/lb. The long-term indicator remains at US$52.00/lb.
Another Player
Kazakh-based fund manager Agraga last week reported the completion of the first round of funding for its uranium fund, ANU Energy, through a private placement valued at more than US$74m. This is US$24m more than initially planned, due to additional investments by one of the investment companies held by Samruk-Kazyna, Kazakhstan's sovereign wealth fund.
Kazakh state-controlled uranium producer Kazatomprom has entered into an agreement to serve as a key uranium supplier to ANU Energy, and also act as an investor.
All very cosy.
Under ANU Energy’s supply agreement with Kazatomprom, the first full U3O8 delivery was made to the fund on May 12.
Demand Side
The UK government last week announced a GBP120m fund designed to accelerate new nuclear technologies while encouraging new players into the market. The Future Nuclear Enabling Fund will help to realise the government's ambition to approve eight new reactors by 2030, as committed within the British Energy Security Strategy in April.
In South Korea, new president Yoon Suk-yeol remains committed to a campaign pledge to strengthen the nation's nuclear power sector and reverse the nuclear phase-out agreed by his predecessor.
As a result, the government said last week that construction of two reactor units at the Shin Hanul Nuclear Power Plant would start in 2025, and an application would be made next year so that Kori Unit 2 can be operated beyond its service life. It also plans to adapt laws and national plans so that older nuclear power plants can remain in service longer.
Uranium companies listed on the ASX:
| ASX CODE | LAST PRICE | % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|
| BKY | 0.0000 | 0.00% | $0.64 | $0.00 | |||
| BMN | 0.0000 | 0.00% | $0.44 | $0.00 | |||
| BOE | 0.0000 | 0.00% | $3.10 | $0.00 | $3.200 | ||
| ERA | 0.3000 | 0.00% | $0.58 | $0.00 | |||
| PDN | 0.6700 | 0.00% | $1.12 | $0.00 | -71.3 | $1.000 |  49.3% |
| PEN | 0.1700 | 0.00% | $0.35 | $0.00 | |||
| VMY | 0.1800 | 5.88% |
$0.33 | $0.00 | $0.210 | 16.7% |
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