Weekly Reports | Sep 19 2023
With supply curtailed and demand rising, the spot uranium price is now at its highest level since Fukushima.
-U3O8 buyers chase up rising offers
-Utility buying frenzy predicted
-Another Japanese nuclear restart
By Greg Peel
The week before last saw uranium market participants attending the annual World Nuclear Symposium in London. Such global gatherings, of which there are several for the industry through the year, tend to result in little or no activity in the market.
The one spot transaction in the week had industry consultant TradeTech’s weekly spot price indicator rising US$1.00 to US$62.00/lb. But with everyone back last week, the race was on.
At the Symposium, attention was given to supply-side issues including Cameco downgrading its production guidance and Orano being forced to cease production at its Niger mine due to sanctions imposed on the military rulers leading to logistical constraints, which come amidst the ongoing problem of uncertain supply from Russia.
On the other hand, the Sprott Physical Uranium Trust re-entered the market after a long hiatus, issuing 1.5m new units in the trust, increasing its cash position from US$10.2m to US$34.2m. The fund currently holds 61.8mlbs U3O8, TradeTech reports.
Taking all of the above into account, sellers were last week happy to continue raising their spot price offers and forcing buyers to chase. This meant only a limited number of transactions were concluded, but at increasingly higher prices.
TradeTech’s weekly spot price indicator rose US$3.50 to US$65.50/lb, to its highest level since 2011 when the Fukushima disaster sent the spot price on a path to US$17.75/lb.
Term Markets
Capital Markets reported last week a recent poll by UxC indicated that 44% of global utilities expect their inventory levels to increase in the next 1-2 years versus only 6% expecting a decrease. With EU and US-based utility inventories collectively at a meagre 190mlb, the lowest level since 2008, significant purchases could be required.
Additionally, given US utilities have been notably absent in the term market year to date, Capital Markets believes there could be a slightly frenetic end to what has already been a very busy year.
As of last week, UxC reported that some 121mlbs have been put under long-term contract so far in 2023. This compares to a total of 125mlbs in 2022 (the highest level in ten years). History suggests contracting begets more contracting, and if history repeats itself, we are on track to potentially double 2022 volumes (and finally achieve above replacement rate).
TradeTech’s term price indicators remain at US$62.00/lb (mid-term) and US$65.00/lb (long).
Capital Markets notes its long-term uranium price forecast of US$75/lb “might be considered by some as conservative”.
Slow Process
Japan’s Kansai Electric Power Co has restarted Unit 2 at its Takahama Nuclear Power Plant after it was removed from service in 2011.
With the restart of Takahama Unit 2, Japan now has 12 reactors that have resumed operation since a fleet-wide closure for inspections and safety upgrades following the Fukushima accident.
Pre-Fukushima, Japan had over 40.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 15/09/2023 | 0.1100 |  28.57% |
$0.25 | $0.05 | |||
| AGE | 15/09/2023 | 0.0680 | 13.33% |
$0.07 | $0.03 | |||
| BKY | 15/09/2023 | 0.3900 | 2.63% |
$0.80 | $0.25 | |||
| BMN | 15/09/2023 | 2.6300 | 13.87% |
$2.75 | $1.19 | $3.200 | 21.7% |
|
| BOE | 15/09/2023 | 4.3600 | 13.42% |
$4.48 | $1.97 | 52.7 | $3.600 |  -17.4% |
| DYL | 15/09/2023 | 1.0900 | 15.18% |
$1.10 | $0.48 | |||
| EL8 | 15/09/2023 | 0.4800 | 6.25% |
$0.56 | $0.27 | |||
| ERA | 15/09/2023 | 0.0400 | – 2.63% |
$0.30 | $0.03 | |||
| LOT | 15/09/2023 | 0.2800 | 14.29% |
$0.28 | $0.15 | $0.530 | 89.3% |
|
| NXG | 15/09/2023 | 9.6600 | 11.56% |
$10.40 | $0.00 | |||
| PDN | 15/09/2023 | 0.9800 | 4.89% |
$0.97 | $0.52 | 113.4 | $1.123 | 14.6% |
| PEN | 15/09/2023 | 0.1100 | 19.32% |
$0.20 | $0.09 | $0.270 | 145.5% |
|
| SLX | 15/09/2023 | 3.6300 | 11.78% |
$5.32 | $2.56 | $5.800 | 59.8% |
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