Nuclear fuel buyers could ‘prop’ strengthening uranium prices, Berkeley says

An existing structural supply deficit in the global uranium market, aggravated by ongoing COVID-19 supply disruptions, has sent the spot price up +30 per cent year-to-date.

Project developer Berkeley Energia (ASX:BKY), which is battling through the approvals process to build its contentious Salamanca uranium mine in Spain, says the uranium spot price has risen to $US32.50 ($51.50) per pound on uncertainty surrounding COVID-19 impacts to the nuclear fuel supply chain.

This represents a year to date uranium price increase of 30 per cent, the company says.

COVID-19 related supply disruptions were announced by a number of major uranium producers during and subsequent to the March quarter, including Kazatomprom (Kazakhstan operations), Cameco (Cigar Lake mine), CNNC (Rössing mine) and Swakop Uranium (Husab mine).

Spot prices (which aren’t an accurate reflection of higher, privately negotiated ‘contact’ prices) could be supported by fuel buyers entering the market, Berkeley says.

“Nuclear fuel buyers for utilities typically look to secure contracts a minimum of two years ahead of use,” the company says.

“With a number of contracts dropping off from 2021, buyers may step into the market, providing another possible prop to uranium prices.”

The market is also waiting for a report from the United States Nuclear Fuel Working Group (NFWG) established following the Section 232 trade investigation into uranium imports.

In July last year the US — the world’s biggest uranium consumer — concluded that trade restrictions on uranium imports “were not warranted as a matter of national security”.

The US Administration, however, established the NFWG to examine the entire nuclear fuel supply chain and conduct a fuller analysis.

A report was expected to be released during March but COVID-19 has further delayed the report’s availability, Berkeley says.

“Release of the NFWG’s findings and recommendations is expected reduce the market uncertainty associated with this policy review process and contribute to improved market conditions moving forward, as US nuclear utilities, in particular, re-enter the market and term contracting in order to address future uncovered uranium requirements,” the company says.

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