Weekly Reports | Dec 06 2022
Interest in the uranium spot market is waning, as interest in uranium term markets heats up.
-Interest fading in spot uranium market
-Term markets remain active
-Global demand continues to grow
By Greg Peel
A total of 12 transactions involving 1.2mlbs U3O8 equivalent were recorded in the uranium spot market in November, industry consultant TradeTech reports, compared to 4.5mlbs in October. The majority of this activity occurred during the first half of the month, before activity stalled as the US Thanksgiving holiday approached, which is not unusual.
TradeTech’s spot price indicator closed out the month at US$49.75/lb, down from US$52.25/lb at end-October.
Sellers re-entered the market following the Thanksgiving weekend, but buyers didn’t. By last Friday, after sellers continued to drop prices, one transaction had been reported for 200,000lbs at US$48.00/lb, down -US2.00/lb week on week.
This price movement runs counter to activity occurring in the term uranium markets. Multiple US and non-US utilities, along with other buyers, are actively engaged in formal and informal discussions with potential suppliers regarding purchases of uranium under multi-year delivery arrangements, TradeTech reports.
One problem is the lack of recent buying by the Sprott Physical Uranium Trust, investment in which by speculators appears to have reached somewhat of a saturation point. The SPUT has accumulated some 59.3mlbs U3O8 since launching in July last year.
The SPUT wasn’t the first kid on the speculative uranium investment block, but since its launch has become the most dominant. The result was the spot uranium market became quickly connected with financial market volatility in general, rather than uranium demand/supply in particular.
This is one reason actual end-users – utilities – have abandoned the spot market in 2022. It has been a very volatile year in financial markets, and to date, a net negative one, scaring investors out of risk assets.
When Climate Change Meets War
The other factor is Russia’s war, which has led to utilities moving to secure future supply from anywhere outside Russia, despite no official sanctions on Russian exports to date. This is likely because the war is already creating an oil & gas supply crisis, sending global electricity price soaring, so take nuclear out of the equation as well and things would only be worse.
Not only have utilities left the spot market behind, they have shifted their supply horizons further out in time, beyond the mid-term and into the longer term, to be more secure ahead of who-knows-what might happen next.