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By all indications the month of September signaled a reversal in the 2024 “backwardation” trend for the U308 spot price, have the short sellers received the memo?
-Macro factors drive positive backdrop for uranium
-Utilities look to term market
-Will the short sellers get the rough end of the pineapple?
By Danielle Ecuyer
Fake tweet detracts from positive news
Is the fortune of the uranium spot price market finally turning in 2024, after a period of price weakness over the previous months?
While a “fake” news tweet on platform X regarding Nancy Pelosi’s husband buying up millions of dollars in uranium stocks is not cause for celebration, industry consultants TradeTech do highlight a reversal of the spot price “backwardation” trend in the month of September.
The TradeTech spot price indicator rose to US$82.25lb as of September 30 against US$79lb on August 31. The spot price marks a 12% increase over a year, despite a fall of -1% monthly, pre-September.
The start of October has maintained some momentum in the spot market with transactions of 600k lbs in the first four days of the month. TradeTech’s weekly spot price moved up US$0.50 to US$82.50lb.
The industry consultants highlighted financial entities and traders as the key buyers, along with the Sprott Physical Uranium Trust, which scooped up another 200k lbs bringing its buying to 300k lbs in the last two weeks to 65.8mlbs.
Utilities continue to hold off and are preferring to transact in the term market.
TradeTech’s Mid-Term U308 price indicator at the end of last week was US$86lb and the Long-Term U308 price indicator stood at US$82lb. Neither of these indicators shifted over September.
Data centres drive nuclear energy demand
September was characterised by some major macro-economic events, all pointing to rising demand for nuclear energy and hence a more positive backdrop for uranium prices. While the price weakness was arrested, TradeTech believes spot and term price markets fail to reflect the shift occurring inside the nuclear fuel industry.
Notably, the demand for increased power supplies at scale with reliability from burgeoning demand as data centre developments become ever larger, grabbed the headlines in September.
Microsoft announced a 20-year power contract with Constellation Energy which will result in the re-start of Three Mile Island Unit by 2028; Larry Ellison from Oracle was singing from the same song sheet pointing to the deployment of small modular reactors as power sources, although they are a high-cost work in progress at this stage for the industry.
CEO of Google, Sundar Pichai also explained the conflicts of meeting the company’s 2030 emissions targets against the growth in power demand for the development of over 1GW data centres.
NextEra Energy flagged the evaluation for the possible re-start of the Duane Arnold Energy Centre, a plant located in Palo, Iowa which was shut down four years ago because of unfavourable economics.
TradeTech observes the US Department of Energy guaranteed a loan of up to US$1.52bn to assist in the restart of the Palisades Nuclear Power Plant, owned by Holtec International in Michigan state. Management indicated a restart in 4Q2025.
Capping off the big month of news was the commitment from 14 major financial institutions to support the tripling of nuclear energy capacity by 2050.
Short squeeze in the making?
Short sellers either haven’t received the more bullish macro memo or are choosing to ignore it. Short interest in Boss Energy ((BOE)) stood at 12.52% on Sept 27 versus 10.41% on Sept 19 and 8.88% on August 27.
Paladin Energy ((PDN)) exhibits a similar trend with short interest up to 13.49% on September 27 from 9.76% a month earlier and 11.91% a week earlier.
Lotus Resources’ ((LOT)) short interest has risen 18% over the month to 7.67% and Deep Yellow’s ((DYL)) shorts stand at 8.74%, basically flat on the month.
On the geopolitical front, President Putin’s comments in September emphasised the possibility of Russia considering a cessation of enriched uranium deliveries to the West in response to the sanctions post the invasion of Ukraine.
TradeTech points to the shift by the US Department of Energy request for proposals for delivery of low-enriched uranium as part of the strategic shift to increase US supply and decrease reliance on Russian supplies.
A casual observer could not be blamed for thinking both the short sellers and the over-arching macro picture can’t be right. Or maybe the two narratives can co-exist until something breaks one or the other.
FNArena’s The Short Report: https://fnarena.com/index.php/analysis-data/the-short-report/
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 04/10/2024 | 0.0500 | 0.00% | $0.19 | $0.03 | |||
| AEE | 04/10/2024 | 0.1600 |  – 8.82% |
$0.33 | $0.11 | |||
| AGE | 04/10/2024 | 0.0500 | – 8.00% |
$0.08 | $0.03 | $0.100 |  100.0% |
|
| AKN | 04/10/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 04/10/2024 | 0.0800 | – 3.90% |
$0.20 | $0.07 | |||
| BKY | 04/10/2024 | 0.3300 | – 8.33% |
$0.45 | $0.26 | |||
| BMN | 04/10/2024 | 3.3000 | 5.10% |
$4.87 | $1.90 | $7.400 | 124.2% |
|
| BOE | 04/10/2024 | 3.3900 | 2.13% |
$6.12 | $2.38 | 23.9 | $4.280 | 26.3% |
| BSN | 04/10/2024 | 0.0300 | – 2.86% |
$0.21 | $0.02 | |||
| C29 | 04/10/2024 | 0.0700 | 0.00% | $0.12 | $0.06 | |||
| CXO | 04/10/2024 | 0.1200 | -11.54% |
$0.41 | $0.08 | $0.090 | -25.0% |
|
| CXU | 04/10/2024 | 0.0200 | 0.00% | $0.06 | $0.01 | |||
| DEV | 04/10/2024 | 0.1400 | -15.15% |
$0.45 | $0.11 | |||
| DYL | 04/10/2024 | 1.4300 | 9.45% |
$1.83 | $0.91 | -78.9 | $1.900 | 32.9% |
| EL8 | 04/10/2024 | 0.3900 | – 5.00% |
$0.68 | $0.26 | |||
| ERA | 04/10/2024 | 0.0100 | 42.86% |
$0.08 | $0.00 | |||
| GLA | 04/10/2024 | 0.0200 | 0.00% | $0.04 | $0.01 | |||
| GTR | 04/10/2024 | 0.0040 | 0.00% | $0.02 | $0.00 | |||
| GUE | 04/10/2024 | 0.0900 | 28.57% |
$0.18 | $0.05 | |||
| HAR | 04/10/2024 | 0.0400 | 0.00% | $0.28 | $0.03 | |||
| I88 | 04/10/2024 | 0.4900 | – 7.84% |
$1.03 | $0.14 | |||
| KOB | 04/10/2024 | 0.1400 | – 7.14% |
$0.18 | $0.07 | |||
| LAM | 04/10/2024 | 0.7250 | 3.57% |
$1.04 | $0.48 | |||
| LOT | 04/10/2024 | 0.2600 | 0.00% | $0.49 | $0.20 | $0.540 | 107.7% |
|
| MEU | 04/10/2024 | 0.0400 | 0.00% | $0.06 | $0.03 | |||
| NXG | 04/10/2024 | 10.0500 | 1.25% |
$13.66 | $7.89 | $16.200 | 61.2% |
|
| ORP | 04/10/2024 | 0.0500 | 0.00% | $0.12 | $0.04 | |||
| PDN | 04/10/2024 | 11.8400 | 0.95% |
$17.98 | $8.15 | 23.5 | $14.160 | 19.6% |
| PEN | 04/10/2024 | 0.1000 | 4.26% |
$0.15 | $0.07 | 33.3 | $0.260 | 160.0% |
| PNX | 04/10/2024 | 0.0040 | 0.00% | $0.01 | $0.00 | |||
| SLX | 04/10/2024 | 4.5900 | 4.65% |
$6.74 | $3.01 | $7.200 | 56.9% |
|
| TOE | 04/10/2024 | 0.2800 | 14.89% |
$0.70 | $0.01 | |||
| WCN | 04/10/2024 | 0.0200 | 0.00% | $0.03 | $0.01 |
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For more info SHARE ANALYSIS: BOE - BOSS ENERGY LIMITED
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