Weekly Reports | Sep 06 2022
The prior week’s news from Japan jolted the uranium spot market back into action in the last days of August, following an otherwise quiet month.
-Buyers reappear on Japanese shift in nuclear policy
-Term markets focus on securing enriched uranium
-Nord Stream shutdown provides further angst
By Greg Peel
August was a quiet month in uranium markets, with the gap between bids and offers on the spot market mostly failing to close. It was a different story for listed uranium equities nonetheless, which responded positively to the passage of the Inflation Reduction Act in the US despite little movement in spot prices.
That changed last week after Japan announced a post-Fukushima policy shift, driven by the war-induced global energy crisis. To date only six of a remaining 33 viable Japanese nuclear reactors are operating, despite 25 having been approved by Japan’s regulator and 17 having moved past strict safety reviews.
Last week the Japanese prime minister announced that not only would the restart of remaining reactors be stepped up, but that Japan would look to building new, next-generation reactors.
Uranium equities shot up again on this news and this time the spot uranium market followed. In the last days of August, uranium traders pushed spot prices increasingly higher. Industry consultant TradeTech’s spot price indicator hit US$53.50/lb to close the month, up US$5.00 from the prior Friday’s weekly price indicator, and US$4.75 above July’s close.
The spot market in 2022 has been dominated by financial entities, with utilities eschewing resultant volatility and sticking to term markets.
If this year has been any guide, the crunch in global financial markets brought about by Jerome Powell’s hawkish speech at Jackson Hole could have sent uranium prices tumbling alongside stocks and bonds, but it appears the news from Japan managed to override the macro influence.
By week’s end, in the first days of September, the spot price settled back to US$52.00/lb, up US$3.50 from the prior weekly indicator.
Spot volumes in August ultimately totalled 1.6mlbs U3O8 equivalent.
Bit Rich
In the term uranium market, activity remains largely confined to off-market transactions or transactions involving uranium contained in enriched uranium product (EUP), TradeTech reports. Russia is the world’s largest producer of EUP, and delivery contracts settled before the invasion are still being honoured.
The US, in contrast, is limited in its enrichment capacity, but recent legislation is looking to address the issue as the world continues to sever ties with anything Russian.
In the meantime, utilities remain beholden to Russian EUP deliveries but are making every effort to find new, reliable sources. The fear is either the West will impose further sanctions on Russia which this time will include uranium and EUP, or that Russia will simply stop exporting EUP irrespective of contracts.
That fear was only exacerbated this past weekend when Russia shut off the Nord Stream gas pipeline to Europe indefinitely.
Electricity prices in Europe have since shot up, including in France, where only 50% of the country’s nuclear capacity is currently operating due to reactor suspensions for regular maintenance and repairs. Nuclear-reliant France has also had to grapple with the northern heatwave driving up the temperature of water used in reactor cooling systems.
Meanwhile another government policy shift is imminent, this time in Germany. The prior government had decided, post-Fukushima, to exit nuclear power altogether by the end of this year. The new government is now considering, under the circumstances, to reverse this policy.
TradeTech’s mid-term market price indicator has increased to US$52.50/lb from end-August, up from US$51.50/lb end-July.
TradeTechs’ long-term price indicator remains steady at US$53.00/lb.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| BKY | 05/09/2022 | 0.3300 |  – 5.88% |
$0.64 | $0.14 | |||
| BMN | 05/09/2022 | 2.2700 | – 7.66% |
$2.49 | $0.15 | |||
| BOE | 05/09/2022 | 2.7800 |  4.00% |
$3.10 | $0.22 | $2.600 | – 6.5% |
|
| ERA | 05/09/2022 | 0.2600 | 0.00% | $0.58 | $0.16 | |||
| LOT | 05/09/2022 | 0.2600 | -11.11% |
$0.46 | $0.19 | |||
| PDN | 05/09/2022 | 0.8700 | 2.44% |
$1.12 | $0.53 | -145.4 | $0.900 | 3.4% |
| PEN | 05/09/2022 | 0.1900 | – 5.26% |
$0.35 | $0.14 | |||
| VMY | 05/09/2022 | 0.1900 | 0.00% | $0.33 | $0.14 |
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