Spot Uranium Prices Experience Correction

The spot uranium market ran into a fair bit of pressure last week, with industry consultant TradeTech’s weekly spot price indicator losing 5.3% to reach $21.25/lb. According to TradeTech, seven transactions totaling 800,000 lbs U3O8 took place, with buyers having the upper hand. TradeTech’s spot price indicator has run into resistance since peaking at $26.50 per lb in February.

Meanwhile, a positive development, TradeTech noted that there has been an increase in interest in buying for later delivery, particularly post-2020. This is likely a result of buyers wanting to secure supplies at lower prices. The uranium market is expected to turn around when new capacity comes online, and this could start as soon as 2018. While the ramp-up of new nuclear facilities will be gradual, over the long run as they accelerate it will be very bullish for uranium prices.

Meanwhile, even as longer-term optimism remains right now uranium companies are struggling. On Tuesday, Paladin Energy Limited’s earnings showed just how challenging the sector remains for uranium producers and sellers. Paladin reported a gross loss of $22.2 million for the nine months through March 31, 2017. In the comparable period, the company earned $25.7 million.

The company’s sales revenue was $69.4 million from the sale of 2.856 Mlb U3O8. The average realized uranium sales price was US$24.32/lb. The company is expecting cash costs in the range of $16.50/lb to $18.50/lb. through 2017.

Before releasing its earnings the company announced that a number of holders of its convertible bonds agreed to support its alternative restructure proposal, where CNNC will buy Paladin’s 75% stake in the Langer Heinrich Mine for $500 million.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.