Weekly Reports | Mar 01 2022
The lack of sanctions, to date, on Russian energy exports led to the spot uranium price taking off last week.
-Sanction relief spurs uranium price
-Some companies taking their own measures
-Utility interest becoming more urgent
By Greg Peel
It’s been a bit of a wild ride for the uranium price in 2022 so far, which kicked off with political unrest in Kazakhstan driving a single day’s jump in the spot price of US$3.85/lb in early January on supply fears.
Those fears soon abated, but then the Fed made its policy about-face and turmoil in financial markets in general led to buyers disappearing from the uranium market.
Now we have the Ukraine invasion, leading initially to talk of sanctions, then to the imposition of some sanctions, and now more sanctions, but so far Russia’s energy exports have been left untouched, specifically due to the crisis it would cause in Europe.
The spot uranium price responded by being unmoved the week before last, and still unmoved early last week, until it was confirmed the list of sanctions did not include energy. Industry consultant TradeTech’s weekly spot price indicator jumped US$3.75 to US$47.00/lb.
The Sprott Physical Uranium Trust was in there buying again, of course, as the fund experienced a jump in investor interest, but buyers included other speculative funds and traders, and even utilities.
TradeTech reports 2mlbs U3O8 equivalent changing hands last week, of which 1.8mlbs were transacted the day the sanction list was disclosed.
Taking Action
While Europe may be relieved oil and gas supplies will not be cut off for now, some countries have taken matters into their own hands with regard uranium.
Swedish power company Vattenfall, one of Europe's largest utilities, responded to the invasion by stating that due to the "serious security situation" it has "decided that no planned deliveries from Russia to our nuclear power plants will take place until further notice." The utility also said it would not place any new orders from Russia for its nuclear power plants until further notice.
Finnish utility Fennovoima had been planning to build a new Russian-designed reactor, but Finland’s prime minister said she believes new risk analysis should be conducted.
Fennovoima responded by suggesting the "Russian invasion of Ukraine, and the counter measures by European Union and Western countries as a consequence, pose a major risk for the project”.
Utilities across the globe had already become anxious about their supplies so far in 2022 due to supply chain logistics and rising inflation, leading to more urgent buying interest. Term markets have now seen additional off-market activity as a result of the developments in Ukraine as well, TradeTech reports.
A number of buyers have been evaluating potential purchases since early this year and recent events have served to crystallise buying decisions. Several utilities have either committed to term purchases or have plans to issue requests for purchase or pursue off-market opportunities.
The volumes and delivery dates of this demand are varied and include both smaller mid-term purchases along with more substantial volumes that extend into the latter part of the long-term delivery window, TradeTech notes.
TradeTech’s term price indicators remain at US$44.50/lb (mid) and US$45.25 (long) until the consultant reassesses at month end, noting the spot price currently exceeds term prices.
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