Weekly Reports | Sep 27 2022
After falling heavily post the US CPI release, spot uranium bounced slightly last week, but reluctance remains.
-Slight bounce, but Fed drives further spot uranium volatility
-Term markets remain stable
-UN pushes for nuclear energy in Europe to help reach zero net carbon goals
By Greg Peel
Two weeks ago global financial markets responded violently to the shock US CPI print. Spot uranium was not spared, with industry consultant TradeTech’s weekly spot price indicator falling -US$4.50 to US$47.50/lb. It was nothing to do with any demand/supply issue, rather simple selling of a financial instrument.
Last week the Fed raised its cash rate by 75 basis points. While this was as expected, sharply higher rate expectations from FOMC members ensured market turmoil has continued. Prior to the Fed release, the spot market did see trading US$2.00 above the previous week’s level, but afterwards, sellers again lowered their prices. Buyers were not tempted.
On the final spread between the two at week’s end, TradeTech assessed a spot price indicator of US$48.50/lb, up US$1.00 for the week.
The Other Market
Despite spot market volatility, uranium term markets remain buoyant and active. Utilities are waiting for the day Russia’s actions lead the West to finally ban exports of enriched uranium from Russia, or Russia decides to cut off uranium exports as it has apparently done with gas to Europe.
The gas crisis in Europe may explain why the West is reluctant to curtail yet another source of power, important to several European countries.
While Russian exports continue to flow under pre-war term contracts, Western utilities continue to seek non-Russian sources for new contracts. The uncertainty has had one clear effect, TradeTech reports. Previously the average term delivery contract was three-five years in duration. That has now blown out to ten years, as utilities look to secure longer term supply.
TradeTech’s term price indicators remain at US$52.50/lb (mid) and US$53.00/lb (long). We might note that TradeTech’s estimated average cost of production has moved up to US$52.70/lb, as the industry suffers the same inflation issues as everyone else. This does not yet provide for any clear incentive to build new production.
UN-Deniable
TradeTech notes support for the global nuclear power market was expressed last week in a new report from the United Nations Economic Commission for Europe, which noted that nuclear plays a significant role in scenarios which achieve carbon neutrality in North America, Europe, and Central Asia.
If advanced reactors are successfully deployed to complement large-scale nuclear reactors, and there is progress in introducing low-carbon hydrogen infrastructure, then the role for nuclear energy is even greater, the report suggests.
The publication, the first UN-regional led modelling of the energy system, identifies a range of technology and policy solutions for the region to attain carbon neutrality by 2050.
Meanwhile, South Korea has moved further down the nuclear path by last week including nuclear power in a draft of a ”green taxonomy” document, implying government subsidies will be made available to support development.
Public hearings will now be held ahead of an expected finalisation by the end of this year.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| BKY | 26/09/2022 | 0.3100 |  – 6.06% |
$0.64 | $0.14 | |||
| BMN | 26/09/2022 | 1.8000 | -12.20% |
$2.49 | $0.15 | |||
| BOE | 26/09/2022 | 2.3500 | -12.64% |
$3.10 | $0.23 | $3.300 |  40.4% |
|
| ERA | 26/09/2022 | 0.2100 | – 8.70% |
$0.45 | $0.16 | |||
| LOT | 26/09/2022 | 0.2200 | – 8.33% |
$0.46 | $0.19 | |||
| PDN | 26/09/2022 | 0.7400 | -12.94% |
$1.03 | $0.53 | -132.1 | $1.100 | 48.6% |
| PEN | 26/09/2022 | 0.1600 | -11.11% |
$0.31 | $0.14 | |||
| SLX | 26/09/2022 | 2.8700 | -15.09% |
$4.14 | $0.99 |
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