Financial Market

Uranium Week: Follow The Leader

Weekly Reports | 10:36 AM

As global financial markets bounced from their sell-offs last week, so too did spot uranium.

-Spot uranium price bounces
-SPUT ready to re-enter market
-European energy sector unions push for nuclear power

By Greg Peel

Interest from speculative investment trusts in uranium as a financial instrument has led to the alignment of spot uranium prices with general financial market volatility in 2022. The Sprott Physical Uranium Trust in particular was most influential in driving the uranium spot price up to a post-Fukushima high of US$64/lb earlier this year.

But turmoil in financial markets has since flowed over to spot uranium, causing the SPUT to take a hiatus from the uranium market thus allowing industry consultant TradeTech’s weekly spot price indicator to fall as far as US$45.50 two weeks ago, opening up a wide gap to TradeTech’s term contract price indicator of US$61.00/lb, which is supported by actual end-user demand.

Last week financial markets saw rebounds, exemplified by the S&P500 rallying over 6%, and again this volatility was reflected in the spot uranium price. TradeTech’s weekly spot indicator rose US$1.65 to US$47.15/lb.

There was nevertheless further impetus for a rally last week when increased investor interest at lower prices allowed the SPUT to raise additional funds in the last two days of the week. As a result, sellers expect the fund to enter the market this next week to acquire additional pounds of uranium.

These expectations caused a number of sellers to move their firm offers to indicative offers or withdraw from the market altogether, TradeTech reports, leaving a limited number of sellers willing to commit to sales as the week came to a close.

Union Support

In a joint letter to members of the European parliament, 20 major trade unions in the European energy sector signalled their support for political candidates in favour of including nuclear power in the bloc’s sustainable finance taxonomy.

The unions said nuclear should be included in the taxonomy on the basis of science-based evidence and the aim of the taxonomy to be “technology neutral”, TradeTech reports. Furthermore, they stated that nuclear power has a key role in enabling Europe to achieve carbon neutrality.

The EU is seeking approval from member nations and from the European Parliament to approve the taxonomy, which classifies nuclear and natural gas as sustainable, environmental investments.

The initial move to do so preceded the war in Ukraine. While the EU has now moved to ban 90% of all Russian oil imports by year-end as a response, Europe still relies heavily on Russian pipeline gas ahead of securing alternative sources, such as LNG from Qatar.

Europe relies heavily on electricity from gas-fired power plants. Having initially responded to the Fukushima disaster by seeking to move away from nuclear power, the pendulum has since swung back in nuclear’s favour.

Uranium companies listed on the ASX:

ASX CODE LAST PRICE % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 0.3700 0.00% $0.64 $0.14
BMN 0.2300 0.00% $0.44 $0.12
BOE 2.4300 0.00% $3.10 $0.14 $3.200 31.7%
ERA 0.2800 0.00% $0.58 $0.25
PDN 0.8000 2.56% $1.12 $0.41 -81.5 $1.000 25.0%
PEN 0.1800 0.00% $0.35 $0.12
VMY 0.2000 0.00% $0.33 $0.09

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