Amidst ongoing supply uncertainty, uranium speculators have been cashing in.
-Uranium spot price down -US$7/lb in February
-Uncertainty over US bans of Russian imports ongoing
-Canada issues nuclear-related green bonds
-BHP considering increasing uranium production
After a very volatile February for uranium spot prices, triggered by the price rise to over US$100/lb, the month ended with further easing from that mark. Industry consultant TradeTech's weekly price indicator fell -US$1.50 to US$93.50/lb.
That's down from US$100.50/lb at end-January, but the indicator is nevertheless up 87% year on year and 55% above the 2023 average price.
TradeTech notes much of the selling has come from financial entities, that first kicked off the uranium rally a few years ago, trimming positions and booking what would be considerable profits at prices over US$100/lb.
Meanwhile, uncertainty continues to overhang the market as to whether US Congress will ban Russian imports or not. A bill to that end did pass the Senate in December but was later blocked by the Republican-led House.
Separately, the US House Foreign Affairs Committee was scheduled to hold hearings on February 15 related to enacting possible sanctions on Rosatom and Russian uranium imports. However, that hearing was postponed and is expected to be rescheduled in the coming weeks. The Republican Speaker called a two-week holiday to the end of February.
Elsewhere in the not so crazy world...
The Canadian government sold CA$4bn of debt last week, marking the first issue under an amended framework for "green" bonds that allow the country to raise funds to support nuclear power. The new framework makes Canada the first country to be involved in nuclear power finance through green bond sales, TradeTech reports.
EU lawmakers have voted to label certain nuclear projects as sustainable, although the European Parliament remains divided amid proliferation concerns and unresolved waste disposal issues.
But the guardrails around financing for nuclear power are evolving in the EU, as evidenced this week with the European Investment Bank, which is the EU's financial branch, voicing an interest in advancing investments in nuclear power and defence projects.
Australia's BHP Group ((BHP)), the world's largest miner, reported at last month's earnings result release it has initiated a major restructuring of its global business, which will affect units from mine planning to decarbonisation and heritage (indigenous) protection.
BHP is considering again expanding its polymetallic Olympic Dam mine in South Australia, which is a major global source of uranium, along with a mix of metals. A decision is expected to be made in FY26-27.
Term Markets
Anticipation around sanctions on Russian nuclear fuel and higher spot uranium prices have resulted in a broader shift toward term contracting, TradeTech reports. While utility buyers have largely avoided the spot uranium market due to high prices, they have remained actively engaged in the term uranium market.
For several months, sellers have tested the willingness of buyers to accept higher prices in long-term contracts. Concerns around geopolitical issues, combined with a desire for increased diversification in their supply portfolios, have led several utilities to agree to higher base prices and higher floor-and-ceiling prices in market-related pricing components.
In addition to accepting higher price terms, utilities are demonstrating their support for new or re-emerging supply by agreeing to terms and conditions that are more favorable to the seller.
TradeTech's mid-term price indicator is US$100/lb at end-February, down from US$103/lb at end-January. The mid-term indicator continues to reflect the fluctuating price level of recent transactions and higher financing costs associated with buying and carrying material for delivery in the mid-term delivery window.
The long-term indicator has risen to US$75/lb, up from US$72/lb. The long-term price has more than doubled since early 2020, and currently sits around 24% above TradeTech's Production Cost Indicator (the estimated cost per pound of new production).
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|
| 1AE | 04/03/2024 | 0.1200 | 0.00% | $0.19 | $0.05 | | | |
| AGE | 04/03/2024 | 0.0570 | 0.00% | $0.08 | $0.03 | | $0.100 |  75.4% |
| BKY | 04/03/2024 | 0.3000 |  - 3.23% | $0.80 | $0.26 | | | |
| BMN | 04/03/2024 | 3.1600 | 4.64% | $3.99 | $1.19 | | $7.040 | 122.8% |
| BOE | 04/03/2024 | 4.9300 | 4.89% | $6.12 | $2.02 | 104.8 | $5.697 | 15.6% |
| DYL | 04/03/2024 | 1.3200 | 5.60% | $1.76 | $0.48 | | $1.725 | 30.7% |
| EL8 | 04/03/2024 | 0.5000 | 8.70% | $0.68 | $0.27 | | | |
| ERA | 04/03/2024 | 0.0510 | 4.08% | $0.23 | $0.03 | | | |
| LOT | 04/03/2024 | 0.3700 | 8.82% | $0.38 | $0.15 | | $0.610 | 64.9% |
| NXG | 04/03/2024 | 11.9700 | 12.39% | $12.99 | $5.11 | | $17.500 | 46.2% |
| PDN | 04/03/2024 | 1.2150 | 2.97% | $1.46 | $0.52 | 411.2 | $1.513 | 24.5% |
| PEN | 04/03/2024 | 0.1150 | 4.55% | $0.20 | $0.08 | | $0.340 | 195.7% |
| SLX | 04/03/2024 | 4.7900 | 6.44% | $5.78 | $2.92 | | $7.600 | 58.7% |
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