Weekly Reports | Aug 23 2022
US President Biden has signed into law an Act that incentivises the US nuclear industry, but uranium markets slumber on.
-No spot or uranium term market transactions
-Wall Street rollover may spark spot selling
-Germany’s energy crisis
By Greg Peel
US President Joe Biden signed the Inflation Reduction Act – considered ground-breaking for the US nuclear industry – into law last week after it had been passed through Congress the week before. But given the response from the uranium spot market, you’d never know it.
For the second week running there were no transactions reported in either the spot or term uranium markets. Having been unchanged the week before, industry consultant TradeTech’s weekly spot price indicator was again unchanged last week at US$47.75/lb.
Term price indicators remain at US$51.50/lb (mid) and US$53.00/lb (long term).
While the northern summer is typically a quiet time in uranium markets, one might have expected, given spot uranium’s newfound status as a volatile, speculative financial instrument, at least something might have happened.
It may be the case this week, given Wall Street began rolling over on Friday night and accelerated its pullback last night. Any “risk off” events in financial markets have usually sparked selling in spot uranium.
Wholesale Shock
One trigger for Friday’s sell-off were data showing Germany’s wholesale inflation had hit an extraordinary 37.2% in July – much higher than forecast.
German energy prices have more than doubled since July. Energy producer costs in the country have risen in response to gas supply shortages driven by Russia's invasion. The result has put pressure on the industrial sector's productivity and positioned Germany to underperform its G7 peers in terms of overall economic performance in 2022, according to the IMF.
The desire to achieve energy independence has taken on increasing importance due to Russia's ongoing threats aimed at energy supply cuts, TradeTech notes. Recent actions to cut off crucial natural gas supplies to a number of European countries, along with new threats, including unverified reports that it seeks to remove the Zaporizhzhia Nuclear Power Plant from Ukraine's power grid, continue to damage Russia's reputation as a reliable fuel supply source.
While US and European utilities may still legally accept deliveries of material from Russia, the hostilities between Russia and Ukraine and Russia's occupation of the Zaporizhzhia plant are making many question the wisdom in relying on Russia as a long-term supplier.
Utilities may be largely absent from the spot uranium market, but they have been actively evaluating their portfolios and pursuing discussions with suppliers in the term market to assess the availability, pricing, and terms that may be offered should they enter the market formally, TradeTech reports.
This has resulted in sellers raising their offer prices. Both sides of the equation – uranium producers and consumers – are suffering from the same inflationary pressures as everyone else.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| BKY | 22/08/2022 | 0.3000 |  – 5.88% |
$0.64 | $0.14 | |||
| BMN | 22/08/2022 | 1.7000 | -13.13% |
$2.29 | $0.14 | |||
| BOE | 22/08/2022 | 2.3000 | – 7.94% |
$3.10 | $0.16 | $2.600 |  13.0% |
|
| ERA | 22/08/2022 | 0.2500 | 0.00% | $0.58 | $0.16 | |||
| LOT | 22/08/2022 | 0.2100 | – 8.33% |
$0.46 | $0.16 | |||
| PDN | 22/08/2022 | 0.6800 | – 4.11% |
$1.12 | $0.46 | -69.9 | $0.800 | 17.6% |
| PEN | 22/08/2022 | 0.1600 | – 5.88% |
$0.35 | $0.13 | |||
| VMY | 22/08/2022 | 0.1900 | 0.00% | $0.33 | $0.09 |
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