Uranium Week: No Show

Welcome to the first FNArena Uranium Week report for 2019.

We left 2018, just before Christmas, noting that activity in uranium markets typically slows to a crawl over the Christmas-New Year period. And so it came to pass. Having left with a spot price of US$29.00/lb, there was a late 2018 dip to US$27.90/lb as traders ditched the last of their year-end overhang before interest returned from producers and utilities in the new year.

To that end, industry consultant TradeTech’s weekly spot price indicator recovered to US$28.85/lb two weeks ago and remained unchanged last week, thus the net result since before Christmas is a -US5c/lb loss.

TradeTech’s term price indicators, as of end-December and still current, were US$29.00/lb (mid), down -US$1.00 from November, and US$32.00/lb (long), up US$1.00 from November.

2018 was a strong year for uranium prices but not particularly driven by utility demand. The primary drivers of demand were speculative interest via listed uranium funds and producer purchases required to cover contract obligations at a time said producers had shut down operations given uranium was cheaper at spot than it was to produce.

As we enter 2019, it appears, so far at least, not much has changed.

Despite consistently rising prices over 2018, one reason utilities were reluctant to commit to major purchase agreements was the uncertainty created by the US Section 232 investigation, which hung over the market for the better part of the year.

To recap:

Early in 2018 two major US uranium producers petitioned the Trump administration to investigate the importation of cheap uranium from foreign sources (such as Russia) which served to shut out demand for more expensive local product. The petition called the issue a matter of “national security”. It is “national security”, and section 232, the Trump administration is using to justify trade tariffs.

The US Department of Commerce is due to issue its report on the matter in April, after which the president has another further 90 days to make a decision.

The petition suggests US nuclear power companies should be forced to purchase a minimum of 25% of their uranium needs domestically (and thus by implication at a higher price). Yet due to the abundance of cheap shale gas for gas-fired power generation and subsidies afforded to renewable energy the nuclear power industry has found itself unable to compete despite what have been, over the prior couple of years, historically low uranium prices. Legacy reactors have been shutting down as a result and new reactor plans abandoned.


Last week brought the annual Nuclear Fuel Supply Forum in Washington. This year’s Forum was a particularly hot ticket affair as it was hoped the DOC might be able to provide some hint as to what the department’s report might suggest come April. But as it turned out, no one from the DOC bothered to turn up.

They are US government workers. You wouldn’t turn up either if you weren’t being paid.

Presumably the longest US government shutdown in history must throw doubt over whether the DOC report will indeed be delivered by April. Perhaps it will be delayed. Either way there’s still another ninety days to wait for the president’s decision so at best it won’t be until July when anything concrete might be known.

The DOC absence in Washington did not, nevertheless, deter interest last week from utilities and others in the spot market last week as 1.5mlbs U3O8 equivalent changed hands, albeit at an unchanged price by week’s end. Spot demand is currently being supported by several term market offers out for tender.

In 2019 to date (as of Friday last), 3mlbs U3O8 equivalent has changed hands in 17 transactions.

It could be an interesting year.

Greg Peel

About Greg Peel

Greg Peel joined Macquarie Bank in 1986 and acquired trading experience in equities, currency, fixed income and commodities derivatives, ultimately being appointed director of equity derivatives trading. He later published In With The Smart Money (a plain English guide to the mysterious world of financial markets and derivatives) and acted as a consultant to boutique investment funds. In 2004 Greg joined FNArena as a contributing writer. He is now a director and principal of the company. Greg compliments the journalistic background of the FNArena team with lengthy experience as a financial markets proprietary trader.

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