Uranium Week: Quieter Period Ahead

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Uncertainty around production and sanctions and the northern summer holidays suggest a seasonal slowdown in uranium markets.

-Summer slowdown
-Long-term price increase for uranium
-France moves forward

By Greg Peel

While price trends in the uranium market do not reflect seasonality as in other industries, the market does go through seasons, industry consultant TradeTech notes. The northern summer is a period for holidays, and the July 4 “long” weekend in the US is a starting point.

The market should thus quieten down from here, but uncertainty concerning production output and potential sanctions on Russian nuclear fuel imports suggest a quiet market anyway. However, an increasing supply deficit foreshadows periods of increased spot and term buying as end-users look to shore up their future deliveries, TradeTech notes.

A total of 1.9mlbs U3O8 was traded in the spot market in the month of June. TradeTech’s weekly spot price indicator dipped -US20c in the last week, to US$56.00/lb, up from US$54.50/lb at the end of May.

Looking Ahead

The shift from the spot delivery window to the mid- and long-term delivery time frames continued throughout the month of June, TradeTech reports. Active demand from utilities, traders, producers, and financial entities continues to exert pressure on mid- and long-term U3O8 prices.

Currently, several US and non-US utilities are already in off-market discussions with potential suppliers. Additionally, a considerable number have expressed their intention to enter the market in September or October, after the end of the summer holidays.

Fifteen transactions were concluded for delivery of material in the term period during June. Prices in transactions concluded throughout the month rose steadily. TradeTech’s long-term price indicator has risen to US$56.00/lb at end-June from US$55.00/lb end-May.

TradeTech’s mid-term indicator nevertheless continues to reflect the price level of recent transactions but also higher financing costs associated with buying and carrying material for delivery in the mid-term delivery window. To that end the indicator is down -US50c from end-May, at US$58.50/lb.

TradeTech’s monthly Production Cost Indicator remains unchanged at US$55.20/lb. The PCI value is driven by fundamentals that underpin the mining and production economics of (re)emerging producers.

While material developments on the cost front have been relatively subdued through the first six months of 2023, the second half of the year is expected to be characterised by the return of at least four idled assets: Boss Energy’s ((BOE)) Honeymoon Project in South Australia; enCore Energy’s Rosita Project in South Texas; and Peninsula Energy’s ((PEN)) Lance Project and Ur-Energy’s Lost Creek Project in Wyoming.

Demand

France has published a bill to accelerate construction of nuclear reactors after it was approved by the country's Constitutional Council. The bill is viewed as a crucial element of the government’s plans to build 6-14 new generation European Pressurized Reactors by 2050.

Toward this goal, state-controlled utility Electricite de France last week announced plans to build two new EPR2 reactors at the existing Penly Nuclear Power Plant site.

Uranium companies listed on the ASX:

ASX CODE	DATE	LAST PRICE	WEEKLY % MOVE	52WK HIGH	52WK LOW	P/E	CONSENSUS TARGET	UPSIDE/DOWNSIDE
AGE	03/07/2023	0.0400	6.06%	$0.08	$0.03
BKY	03/07/2023	0.7300	17.24%	$0.71	$0.25
BMN	03/07/2023	1.6400	8.97%	$2.49	$1.19		$3.200	95.1%
BOE	03/07/2023	3.0700	– 0.97%	$3.29	$1.76		$3.440	12.1%
DYL	03/07/2023	0.7400	3.55%	$1.25	$0.48		$1.040	40.5%
EL8	03/07/2023	0.3000	0.00%	$0.64	$0.27
ERA	03/07/2023	0.0300	6.90%	$0.30	$0.03
LOT	03/07/2023	0.1900	5.88%	$0.30	$0.15		$0.470	147.4%
NXG	03/07/2023	7.0000	2.79%	$7.16	$0.00
PDN	03/07/2023	0.7500	8.03%	$0.96	$0.52	-21.6	$1.080	44.0%
PEN	03/07/2023	0.1700	6.06%	$0.21	$0.12		$0.340	100.0%
SLX	03/07/2023	3.8900	7.22%	$5.32	$2.25		$5.800	49.1%

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