Weekly Reports | May 21 2024
The legal ban on Russian uranium imports into the US comes into force in August.
-US ban on uranium imports from Russia kicks in from August onwards
-Legal waivers trigger opposing interpretations
-Five transactions in spot market at slightly increased pricing
By Rudi Filapek-Vandyck
And after many months of market speculation and political processing, US President Joe Biden signed H.R.1042, the bill that bans the import of Russian uranium products into the USA, on May 13. The ban will go into effect on August 11th.
Whoever thought the way forward for US utilities and the uranium sector at large has now become a lot clearer is still in the minority with industry consultant TradeTech reporting the week's trading continued to be dominated by confusion and ongoing market speculation.
The problem lays with the two legal waivers that can be granted by the US Department of Energy (DOE). Different interpretations kept the future of US uranium purchases as uncertain as before.
As things stand, waivers can be granted in case of:
-no alternative is available to purchase low-enriched uranium
-or; importation is in the USA's natural interest.
The new law requires any waiver must terminate by 1st January, 2028. The ban remains in place until 31st December, 20240.
This is where the real fun begins. According to one interpretation, access to low-cost uranium from Russia is per definition in the national interest as replacing that fuel on short notice has the potential to make nuclear plants uneconomical. This threatens the security of the US electrical grid, and thus national security.
The other interpretation is US utilities must simply bear that operational burden as the ultimate benefit for the US's national security is to no longer be reliant on supply from Russia.
Pick your pick!
TradeTech reports utilities and market participants have been busy trying to obtain more clarity from the Biden administration. As confusion reigned, no transactions were concluded in the first days following Biden's signature.
Spot Market Springs To Life
By Thursday, two transactions were concluded. One involved 100,000 pounds U3O8 for delivery in June, priced at US$90.50/lb. Another deal, also for 100,000 pounds U3O8, for delivery in September, was priced at US$91.75/lb.
That second handshake, however, occurred after the close of business, outside the spot delivery window. TradeTech reports three more transactions were successfully concluded on the Friday for prices ranging between US$91.25/lb and US$91/lb.
Equally important, perhaps, is that while the spot market has been ruled by apprehension, confusion and speculation, the uranium term market is largely characterised by "robust demand", according to the consultant.
US utilities have been active over the course of many months to secure deliveries for their future needs in a desire to diversify supply sources and mitigate the impact of the legal ban.
As per TradeTech, the increase in demand from utilities has resulted in sellers raising their offer prices and pushing for terms and conditions more favourable to the sellers.
TradeTech's weekly spot price indicator has been set at US$91/lb, up US25c from the week prior, alongside a mid-term indicator of US$95/lb and a long-term pricing benchmark of US$80/lb. On TradeTech's assessment, a decent production cost indicator for the industry is currently US$56.90/lb.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 20/05/2024 | 0.0900 |  12.50% |
$0.19 | $0.05 | |||
| AGE | 20/05/2024 | 0.0700 | 4.84% |
$0.08 | $0.03 | $0.100 | 42.9% |
|
| BKY | 20/05/2024 | 0.3800 |  – 2.53% |
$0.80 | $0.26 | |||
| BMN | 20/05/2024 | 4.7100 | 7.76% |
$4.87 | $1.19 | $7.400 | 57.1% |
|
| BOE | 20/05/2024 | 5.8500 | 3.36% |
$6.12 | $2.62 | 60.7 | $5.425 | – 7.3% |
| DYL | 20/05/2024 | 1.7400 | 5.86% |
$1.80 | $0.53 | $1.770 | 1.7% |
|
| EL8 | 20/05/2024 | 0.5700 | 5.77% |
$0.68 | $0.27 | |||
| ERA | 20/05/2024 | 0.0500 | 0.00% | $0.08 | $0.03 | |||
| LOT | 20/05/2024 | 0.4800 | 5.56% |
$0.49 | $0.17 | $0.660 | 37.5% |
|
| NXG | 20/05/2024 | 12.2900 | 7.67% |
$13.66 | $5.78 | $17.500 | 42.4% |
|
| PDN | 20/05/2024 | 17.7700 | 6.78% |
$17.89 | $5.15 | -517.0 | $16.470 | – 7.3% |
| PEN | 20/05/2024 | 0.1200 | 4.35% |
$0.20 | $0.08 | $0.310 | 158.3% |
|
| SLX | 20/05/2024 | 6.4800 | 5.28% |
$6.74 | $2.92 | $7.600 | 17.3% |
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