Weekly Reports | Jan 10 2024
This story features PALADIN ENERGY LIMITED. For more info SHARE ANALYSIS: PDN
The US Senate is expected to confirm a ban on the import of uranium from Russia this month as the House of Representatives already agreed on such ban for US utilities.
-US politics in the spotlight as Russian import ban looms
-Overall activity in buying and selling of uranium has gone quiet
-U3O8 spot price surges to 16-year high
By Rudi Filapek-Vandyck
The short term outlook for uranium pricing lays in the hands of the US senate, or so it appears.
The US House of Representatives passed legislation to ban the import of Russian nuclear fuel on December 11 last year, with the proposed ban kicking in 90 days after the bill becomes law. Thus far, however, the US Senate has not followed-through.
The first attempt to turn the proposed ban into US law on December 14 was blocked by senator Ted Cruz. The Senate has gone into recess over the holidays, but is expected to review the matter again this month.
Industry consultant TradeTech reports many market participants expect the US Senate to pass the proposed ban, with material consequences for the availability of uranium in the country.
Multiple Drivers Buoy The Sector
Against this background, it is hardly a surprise spot U3O8 continued to break records in the closing weeks of calendar 2023. In November the spot price reached US$81.50/lb, on TradeTech's assessment, but December witnessed the price breaking through US$90/lb for the first time in 16 years.
For those wondering, back in the previous bull market of 2006-2007, the price of uranium peaked at US$136-US$138/lb. Those were the days shares in Paladin Energy ((PDN)), then trading as Paladin Resources, temporarily reached $10 without producing one single unit of yellowcake.
Yes, indeed, those were the days!
TradeTech suggests American politics cannot be exclusively held responsible for this latest leg upwards in the pricing of uranium. The United Nations' COP28 climate conference in Dubai earlier in December provided renewed optimism about future growth in nuclear power generation the world around.
While market concerns about future supplies have been around generally since Russia invaded the Ukraine two years ago, the initiative by the US House of Representatives has yet again raised anxiety inside the American industry.
December Scramble
Throughout December, transactions concluded at prices between US$89.75 and US$91.25 a pound of U3O8, reports TradeTech. Total monthly spot transactional volume surpassed 2 million pounds, but by December 22 holidays were beckoning and the market went quiet.
The first week of 2024 has continued to be relatively quiet.
As per December 31st, TradeTech's exchange value was set at US$91/lb, an increase of US$9.50 from late November. The consultant observes some sellers have been testing the market's willingness to move contract ceiling pricing to US$100/lb and after initial reluctance, those contract terms have been accepted by some buyers.
Reports TradeTech: "So far, these transactions are limited in number, but the fact that transactions have officially been concluded containing ceilings at this level is notable." A number of utilities currently in the market have specifically excluded consideration of Russian supply.
TradeTech's long-term U3O8 price indicator rose to US$68/lb in December, up US$2 from November. This sets a fresh 12-year high. The long-term price has doubled since early 2020 and is currently 19% above TradeTech's Production Cost Indicator.
The consultant's mid-term price indicator gained US$10.50/lb in December to US$93/lb.
At the end of the first week into 2024, the consultant's weekly spot price indicator has added an additional US$1 to US$92/lb. Only one transaction was successfully concluded during the week. The production cost indicator currently sits at US$55.40/lb.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 09/01/2024 | 0.1100 |  – 8.33% |
$0.18 | $0.05 | |||
| AGE | 09/01/2024 | 0.0600 | – 1.72% |
$0.07 | $0.03 | $0.100 |  66.7% |
|
| BKY | 09/01/2024 | 0.3000 | 1.72% |
$0.80 | $0.26 | |||
| BMN | 09/01/2024 | 3.0600 | 2.14% |
$3.05 | $1.19 | $3.200 | 4.6% |
|
| BOE | 09/01/2024 | 4.9000 | 9.46% |
$4.98 | $2.02 | 83.0 | $4.763 | – 2.8% |
| DYL | 09/01/2024 | 1.2200 | 0.87% |
$1.41 | $0.48 | $1.640 | 34.4% |
|
| EL8 | 09/01/2024 | 0.4900 | – 4.17% |
$0.59 | $0.27 | |||
| ERA | 09/01/2024 | 0.0400 | 7.69% |
$0.30 | $0.03 | |||
| LOT | 09/01/2024 | 0.3100 | 1.69% |
$0.33 | $0.15 | $0.530 | 71.0% |
|
| NXG | 09/01/2024 | 10.4900 | – 0.80% |
$10.80 | $5.11 | |||
| PDN | 09/01/2024 | 1.1700 | 4.95% |
$1.15 | $0.52 | 180.9 | $1.190 | 1.7% |
| PEN | 09/01/2024 | 0.1000 | – 6.00% |
$0.20 | $0.08 | $0.250 | 150.0% |
|
| SLX | 09/01/2024 | 4.4300 | – 2.64% |
$5.32 | $2.92 | $5.800 | 30.9% |
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