Uranium Week: Reassessing Uranium Prices

Weekly Reports | Jan 30 2024

Brokers have queued up to lift their longer-term uranium price forecasts just as the spot price sees its first weekly drop since November.

-Spot uranium price dips
-Longer-term price forecasts seeing widespread upgrades
-Australian-listed uranium stocks in the spotlight

By Greg Peel

Uranium buyers were dealt a reprieve last week when the spot price actually fell back for the first time since November. While prices heading into January were surging, reaching US$106/lb the week before last on industry consultant TradeTech’s weekly spot price indicator, actual transactions were few.

Sellers kept backing off their prices and buyers became reluctant to chase. The impetus for most recent price strength had been the passage of a bill through the US House banning imports of Russian enriched uranium (with caveats), which was expected to then sail through the Senate.

It didn’t, having been blocked by a Republican senator from Texas, so last week sellers moved swiftly to lower prices.

While the effect was a -US$6.00 drop in TradeTech’s price indicator to US$100.00/lb, suddenly there was volume changing hands. A total of eight transactions were concluded in the week.

Meanwhile, the impact of the Red Sea conflict has extended to the uranium market. Australia’s BHP Group ((BHP)) is now diverting nearly all of its shipments to Europe away from the Red Sea, with the long route around Africa adding nine days to the journey.

Time to Panic

The recent rise in the spot uranium price, along with the announcement by Kazatomprom it expects to adjust its production target, have caused sellers to consider how these developments may impact the long-term uranium price going forward, TradeTech reports.

Recent term offers are higher than those submitted only a few weeks ago, indicating the long-term price is experiencing upward price pressure.

Last week Australian stockbroker Shaw & Partners noted the recent spot price rise, through US$100/lb, has been larger and earlier than expected, although at this stage the market remains orderly, and the price increases do not appear to be driven by panic buying.

That may change, Shaw warns, if utilities believe they will have difficulty covering their fuel demands later this decade. Panic buying could drive the uranium price materially higher. There is a great saying in markets that “he who panics first, panics best”, hence Shaw recommends uranium sector investors get ahead of potential panic buying.

Shaw is now assuming a multi-year price spike to US$150/lb in 2025-27. The forecast implies the previous all-time high of US$136-138/lb will be superceded. Thereafter the broker sees the price settling back to a long-term US$76/lb in 2030, in 2024 real dollar terms.

Shaw has also changed its approach to valuing undeveloped uranium resources by introducing different in-ground valuations for different quality of resources. The net effect is material upgrades to price targets and earnings forecasts within the Australian-listed uranium space.

Citi has also raised its uranium price forecasts, suggesting an average of US$101/lb in 2024 and US$110/lb in 2025, while Citi’s long-term forecast is raised to US$115/lb from US$87/lb.

The rush is on. Australian stockbroker Bell Potter has lifted its short and mid-term uranium price forecasts, anticipating a peak of US$130/lb, while a more circumspect Macquarie has lifted its peak uranium price forecast to US$100/lb in 2025.

TradeTech’s term price indicators (not forecasts) remain at US$93/lb (mid-term) and US$68/lb (long).