This comment comes from our friend LPG. I had a read over it this weekend asked LPG if I could post. He said yes, so here is a nice overview of what happened in the uranium market last week.
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WEEKLY U3O8 PRICING UPDATE:
- U308 spot prices popping up 2.2% WoW to US$23.35/lb (+US$0.50)
- UF6 spot prices: there won’t be data till month-end (data is monthly)
Comment:
A little pop in uranium prices for the week. Seems things are progressing in the right direction in the sector. Slowly, but pretty steadily – I value/appreciate that.
As you may have seen with an earlier email from me this week, the big story in the sector this week was that the U.S will launch an investigation into uranium imports for (a) potential tariffs and (b) maybe even reserving a share of U.S utilities purchases to U.S uranium producers. This investigation had been suspected for a few weeks, and it has hence now become official.
Both measures, if enacted, could be to names with U.S. based uranium assets. For example, shares of Energy Fuels (UUUU) popped >25% to about US$2.80/share after-hours on the Bloomberg article this week then pulled back.
We note that Cameco (CCJ, the world’s largest publicly-listed uranium producer, currently doesn’t produce uranium in the U.S but (1) has U.S operations that are in care and maintenance and (2) was the largest U.S. based producer of uranium when in operation. So while any U.S new regulation might not be directly favorable for CCJ right away, it might ultimately be as well.
Timing wise, the U.S. Secretary of Commerce has 270 days to make any recommendation to the President, who then has 90 days to take any decision. Therefore, U.S uranium imports legislation will get more clarity within at most 360 days (= 1 year), but the process could be much shorter. The conjunction of:
1) Energy Fuels and UR-Energy lobbying efforts since Jan. 2018
2) upcoming U.S. mid-terms elections
3) some stocks long-term charts
are suggestive to me the process may only take a few months as opposed to 1 year.
Last week, I suggested we’ll likely see more sector price action in Aug-Sept, underpinned by newsflow, esp. from CCJ re: MacArthur Mine. The later we progress into the year, the more likely we’ll get a good idea of Kazatomprom IPO timing (currently expected late 2018-early 2019) but from a seasonal stanpoint, late Q4 is typically weak so IMHO, it wouldn’t really make sense for it to occur at the end of 2018. We now know that there may be some regulatory news re: U.S uranium imports on top of this, which would make for an eventful uranium sector in Q3 18/Q4 18.