Uranium Week: Dragged Down

Weekly Reports | Sep 20 2022

As uranium has now become a financial instrument for investors, the spot price was hit last week in line with financial market volatility following the US CPI release.

-Spot uranium dives on US inflation report
-Term market demand increasing
-Coal-fired plants converting to nuclear?

By Greg Peel

Industry consultant TradeTech’s weekly spot price indicator closed two Fridays ago at US$52.00/lb and the market was buoyed by news of increasing demand for nuclear energy across the globe. On Monday last week, 100,000lbs U3O8 traded at US$52.60/lb, TradeTech reports.

On Tuesday financial markets were sent into turmoil by hotter than expected US inflation data. Spot uranium was not spared.

By week’s end 900,000lbs U3O8 equivalent had changed hands at successively lower prices over the period. TradeTech’s weekly spot price indicator closed at US$47.50/lb, down -US$4.50.

The fall came even as China announced additional reactor approvals.

It’s understandable why utilities now eschew the volatility of the spot market and concentrate solely on term market transactions.

Real Demand Increasing

New demand hit the uranium term markets last week. One non-US utility issued a request for proposal for an equivalent 860,000lbs U3O8 for delivery between February and August next year, TradeTech reports.

A US utility is expecting proposals this week for up to 2.7mlbs U3O8 for delivery between 2024 and 2032.

It had previously been assumed European energy companies were sufficiently covered by contracts for Russian uranium supply, but now those companies are looking to diversify away from Russia and are negotiating with suppliers for supply of enriched uranium from anywhere secure.

At least five utilities (US and non-US) are presently pursuing discussions with potential suppliers or expected to enter the market formally in coming weeks, TradeTech reports. The quantities being discussed involve approximately 11mlbs U3O8 equivalent to be delivered in the mid- and longer-term delivery windows.

The market is also awaiting a decision by the US Department of Energy on its request for up to 1mlbs U3O8 to build a strategic uranium reserve.

TradeTech’s term price indicators remain at US$52.50/lb (mid) and US$53.00/lb (long).

Coal-to-Nuclear

Last week the US DoE released a report, which states that hundreds of US coal-fired power plant sites could convert to nuclear power plant sites, adding new jobs, increasing economic benefit, and significantly improving environmental conditions.

This coal-to-nuclear transition could add a substantial amount of clean electricity to the grid, helping the USA reach its net-zero emissions goals by 2050, according to the DoE.

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 19/09/2022 0.3100 – 6.06% $0.64 $0.14
BMN 19/09/2022 2.0300 – 8.14% $2.49 $0.15
BOE 19/09/2022 2.5800 -13.13% $3.10 $0.23 $3.300 27.9%
ERA 19/09/2022 0.2300 – 4.17% $0.45 $0.16
LOT 19/09/2022 0.2400 – 7.69% $0.46 $0.19
PDN 19/09/2022 0.8300 -12.63% $1.03 $0.53 -152.1 $1.100 32.5%
PEN 19/09/2022 0.1700 -15.00% $0.31 $0.14
SLX 19/09/2022 3.3500 – 5.37% $4.14 $0.99

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