Weekly Reports | Nov 05 2019
The White House has extended waivers on Iran sanctions to companies working in Iran's civil nuclear program for ninety days.
-Iran sanctions waivers extended
-Uncertainty lingers for uranium
-Demand to pick up?
By Greg Peel
Aside from waiting for the recommendations of President Trump's nuclear cycle Working Group and any news on the Russian suspension agreement, the uranium market has been waiting to see what would transpire when waivers on Iran sanctions expired. The waivers have allowed foreign companies to continue working with the Iranians in their nuclear power pursuits.
Last week the White House confirmed waivers would be extended for another ninety days, upsetting the Republican representatives of Texas and South Carolina who intend to advance legislation to reverse this "misguided decision".
Not extending the waivers would have meant sanctions on European, Russian and Chinese companies working in Iran, leading to up to 20% of US nuclear fuel imports being withdrawn.
But supporters of the waiver extension see a more important benefit. Given the sanctions are in place to discourage Iran's progress towards nuclear weapons, who better to keep an eye on which way the country's nuclear program is headed than those working on the inside?
The waivers will "help preserve oversight of Iran's civil nuclear program, reduce proliferation risks, constrain Iran's ability to shorten its ‘breakout time' to a nuclear weapon, and prevent the regime from reconstituting sites for proliferation-sensitive purposes," a White House spokesperson suggested.
This suggests the extension may yet be increased from ninety days although there remains an element of uncertainty. For the uranium market, 2019 has been the year of uncertainty.
That uncertainty has kept utilities largely out of the market and forced sellers into ever lower offer prices, as evidenced by the -US75c fall in the spot uranium price the week before. The waiver extension announcement prompted a US45c bounce in the spot uranium price on Thursday, the last day of October.
Industry consultant TradeTech's spot price indicator thus closed the month of October at US$24.50/lb, down from US$25.70/lb at end-September. Transactions for the month totalled 3mlbs U3O8 equivalent, below the 2019 monthly average.
The spot price then promptly fell back -US35c on the Friday as sellers were spurred into action. This leaves industry consultant TradeTech's weekly post price indicator up US5c for the week to US$20.15/lb. The week's trading totalled 1mlbs of which half was transacted on the Friday.
Demand in Sight?
Despite Friday selling, market participants did find reason to be more optimistic during the week as the Nuclear Energy Institute's International Uranium Fuel Seminar progressed in Nashville. A number of utilities expressed a willingness to consider off-market purchases for mid-term delivery.
Although this demand is not official and in preliminary stages, notes TradeTech, it is a sign to sellers that uncovered demand, particularly in the US, is substantial and that utilities are prepared to begin the contracting process to lock in supplies for delivery beyond the immediate delivery window.
Mind you, the market has been expecting utility demand to pick up for this reason for a very long time now.
TradeTech's mid-term price indicator has nevertheless risen to US$27.50/lb from September's US$27.00/lb, while the long-term indicator remains at US$31.00/lb.
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