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Uranium Week: Ignore Spot Uranium

Weekly Reports | Nov 08 2022

While the uranium spot price falls due to buyers scared of Fed policy, utility demand continues to drive term prices higher.

-Global benefits of nuclear power
-Spot uranium market impacted by Fed
-Term market demand powers on

By Greg Peel

Coinciding with the high fossil fuel prices associated with the Russia-Ukraine conflict and the urgency of finding a safe, resilient substitute for fossil fuel power, nuclear energy appears to be on the verge of a potential renaissance globally, Citi noted in its recent Energy Transition report, especially in Europe.

Citi also suggests nuclear is unlikely to be a quick fix given long lead times, even in countries like the UK that have made nuclear options a high priority.

Even small-scale nuclear power seems a decade away from making a meaningful contribution to energy security. But such energy could potentially play a major role in the energy security and Energy Transition shift over the next few decades.

Nuclear technology is well suited for export, Citi notes, given its relative national resource independence. However, the market will remain confined to the developed world in the 2030s given the high political, regulatory, economic, and defence standards that importing countries will need to meet.

Citi goes on to observe:

Nuclear energy solves the intermittency problem posed by wind and solar generation and requires 31x less land than solar facilities and 173x less than wind farms. Furthermore, nuclear power can be sited much closer to end-markets given its natural resource independence and the transportability of nuclear fuel.

Compared with a capacity factor greater than 90% — three times higher than renewables, with wind and solar capacity factors at around 35% and 25% respectively — nuclear power is well suited to augment renewables deployment in land- or resource-constrained environments.

There are few in the market who don’t believe nuclear power will be a necessary part of the global energy transition away from fossil fuels, and as such longer term uranium price views remain firmly to the upside.

Economic Headwinds

Coming back to today’s reality, the weak financial market reaction to last week’s Fed rate hike and ongoing hawkish rhetoric again played out in the spot uranium market – not so much in selling but in lack of buying. This week will end with the US October CPI result so more volatility may be afoot.

Only one deal was reported in the spot market last week. But with sellers lined up, industry consultant TradeTech’s weekly spot price indicator fell -US$2.75 to US$49.75/lb.

The spot market is no reflection on term uranium markets, which continue to see new buyers emerge.

TradeTech reports 15 transactions in the month of October, involving approximately 15.2mlbs U3O8 equivalent to be delivered over the 2023-2030 period.

In addition, a number of utilities, US and non-US, are expected to issue Request for Proposals or seek off-market offers for term uranium in the coming weeks.

October trade has led TradeTech to increase its mid-term price indicator to US$53.00/lb from US$50.50/lb at end-September, matching an unchanged US$53.00/lb long-term price indicator.

Uranium companies listed on the ASX:

AGE 07/11/2022 0.0510 – 5.66% $0.12 $0.04
BKY 07/11/2022 0.2650 – 1.85% $0.64 $0.14
BMN 07/11/2022 2.0600 – 6.54% $2.49 $0.15
BOE 07/11/2022 2.5800 – 4.51% $3.10 $0.31 $3.300 27.9%
DYL 07/11/2022 0.7650 – 2.60% $1.25 $0.55
ERA 07/11/2022 0.2250 7.32% $0.44 $0.16
LOT 07/11/2022 0.2300 – 4.26% $0.46 $0.19
NXG 07/11/2022 6.4200 0.00% $8.99 $0.00
PDN 07/11/2022 0.8400 – 2.33% $1.03 $0.53 -147.6 $1.100 31.0%
PEN 07/11/2022 0.1800 2.86% $0.30 $0.14
SLX 07/11/2022 2.8800 – 0.34% $4.14 $0.99

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