Uranium Week: Sprott Physical Uranium Trust Speculations

Weekly Reports | 10:00 AM

U308 spot price improved slightly on the return of some buying interest pre and post Trump's tariff announcement.

-Spot market weathers Trump's reciprocal tariffs
-Supply concerns are overstated
-Analysts remain upbeat on U308 stocks

By Danielle Ecuyer

Taking stock at month's end

US tariffs have had a resounding impact on U308 markets across the board. Petra Capital highlighted volumes in both the term and contracts markets continue to be "anaemic".

Industry consultants TradeTech explain March only saw 1.4mlbs in U308 equivalent trading volumes recorded in the spot market, with prices vacillating between US$63.25 and US$64.50.

Petra observes the spot U308 price continues to lag the long-term price, with utilities adopting a wait-and-see approach before committing to buy stock in a period of such high uncertainty around tariffs.

The consultants observed utilities have preferenced one-time deliveries in the mid-term period, and six transactions were concluded in March plus one in the longer-term delivery market. Utilities were the buyers across all seven transactions.

TradeTech's Mid-Term price indicator fell to US$70/lb from US$71/lb in late February. he Long-Term price indicator remnained unchanged over the month at US$80/lb.

Although both spot and term uranium markets remain subdued due to uncertainty around tariffs, major producers like Kazatomprom have been selling down inventories, with a decline of -11% in 2024.

Macro musings on uranium fundamentals

Diving into the Sprott Physical Uranium Trust, which is currently trading at a discount to NAV of circa -9.7%, Petra suggests this discount means the trust cannot issue new units, which is part of the underlying mandate.

Sprott Trust currently has cash of US$8.9m, which is sufficient to cover costs until June/July at a burn rate of around -US$3.4m per month and has not issued new units since January 2025 and not bought pounds since November 2024.

Speculation the trust would need to sell uranium holdings to cover management costs is possible, but Petra stresses speculation the trust would sell its 88.2mlb inventory is not viewed as realistic.

Alternatively, swapping the location of where the inventory is held could free up US$32m. The broker proposes swapping some or all the US-stored inventory, or 16mlbs, which is held at ConverDyn in Illinois and is attracting a premium to spot of US$2/lb with pounds held by Canadian utilities.

The potential to realise the funds could cover management expenses for ten months.

Observing other ideas floated by President Trump regarding the uranium market, Petra dismisses the idea the US, alongside China and Russia, reduces nuclear weapon holdings, based on the first nuclear disarmament and energy conversion deal.

Russia agreed in the first deal to convert 500 metric tons of highly enriched uranium from dismantled Soviet nuclear warheads into low-enriched uranium, which was in turn sold to the US to use in nuclear power plants.

With President Trump's intention to broker a ceasefire between Ukraine and Russia, this has brought forth speculation the US ban on the importation of Russian U308 will be revisited, as well as the Russian ban on exports to the US.

The latter ban was approved by both Congress and Senate with bipartisan support, and a Presidential Executive Order will not be enough to have the legislation overturned.

Petra does not believe the US will cede control of US energy supplies to Russia again for fuel imports and argues it runs counter to the US Energy Secretary's aim to achieve energy dominance.

Yet, despite the increase in supply, utilities have sat on their hands, awaiting more clarity around Trump's tariffs.

Maximum uncertainty continues to underpin weak sentiment, with the broker emphasising the replacement rate contracting is yet to start and the uranium sector continues to offer "broad" value.