Uranium Week: US Uranium Reserve In Question

Future support for the US uranium sector was challenged this week by a decision by the US House Appropriations Committee to withhold funding for a domestic uranium reserve, as requested by the US Department of Energy (DOE). Due to a lack of detail, the DOE has been requested to resubmit its homework with further information on the justification for the reserve and how it will be implemented.

According to consultant TradeTech, industry sources indicated there was some acknowledgement that the DOE should start preparing for the launch of a US Uranium Reserve and storage program based on current funding.

Uranium pricing

The trend remains down in prices.

TradeTech’s weekly spot price indicator fell -US20c to US$32.70/lb last week. This is now eight weeks in a row of incremental declines.

The possible termination of the Russian Suspension Agreement (RSA) is causing uncertainty among US utilities. Market participants are hopeful that a resolution may be reached in coming weeks as a result of negotiations between the US Department of Commerce (DOC) and the Russian government.

It has become increasingly difficult for sellers to secure attractive financing rates, due to the volatile economic environment caused by the pandemic, TradeTech reports. As a result, sellers cannot attract buyers as they are unable to offer sufficiently low prices. The sellers are emboldened to seek higher prices by recent cuts to planned production and previously announced project postponements.

The spot price has increased nearly 30% over the last year, while the average weekly uranium spot price for 2020 is US$29.15 per pound, US$3.32/lb above the 2019 average.

TradeTech discloses a total of three transactions were reported for the week, involving approximately 400,000 pounds U3O8 equivalent.

Company News 

Rio Tinto has recorded an increase in uranium production of 6% over the previous quarter from its 86% share in Energy Resources of Australia ((ERA)). ERA’s Ranger operation continued to process existing stockpiles and sold additional material from inventory to capitalise on improved market conditions during the quarter.

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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