- Western sanctions on Russian imports have disrupted the supply chain of various key commodities.
- The upward momentum in uranium prices in early 2022 was driven by supply risks and higher demand prospects.
- Prices of uranium have dropped more than 12% in the last one month.
The ongoing tussle between Russia and Ukraine has pushed prices of most commodities. Western sanctions on Russian imports have disrupted supply chains of various key commodities, including crude oil, natural gas, coal, wheat, palladium, uranium, and many more commodities in the global market.
Russia is a key force in the uranium market. In 2021, the country accounted for nearly 6% of the world’s total supply, as per Australia’s March 2022 Resources and Energy Quarterly. The overall uranium production of the country is further expected to grow at a CAGR of 4.1% till 2027.
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In March 2022, prices of uranium had reached their highest levels since 2011 after the US banned Russia's oil and other energy products, although the action didn't include uranium.
With minimal direct impacts, the upward momentum in uranium prices till April was driven by future supply risks and prospects of higher demand in the future.
As of Thursday, uranium’s one-month futures exchanged hands at US$47.25/lb. Prices of uranium have dropped more than 12% in the last one month.
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The significant drop in prices of nuclear fuel is attributed to muted action in the spot market due to high volatility in the energy market. Furthermore, recession fears and worries pointing out that higher interest rates could dampen the energy demand in the future, are also weighing on uranium prices.
In addition to this, ongoing COVID-19-led restrictions in China are also capping the demand and eventually pressurising prices of uranium.
Jitters to the global market
Ongoing geopolitical tensions between Russia and Ukraine have sparked supply jitters in the global uranium market and lifted uranium stocks.
Shares of Australia’s Paladin Energy (ASX:PDN) have gained as much as 35.85% in the last one year. As of Thursday, they were trading at AU$0.72 per share. PDN is a WA-based uranium exploration company, having operations in Africa and Namibia.
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Another uranium player, Peninsula Energy (ASX:PEN), owner of the Lance Uranium Projects in Wyoming, tumbled as much as 2.94% during an intraday trading session on the same day.
Moreover, Bellavista Resources Limited (ASX:BVR) made its IPO debut on Wednesday. The BVR Prospectus closed heavily oversubscribed on its initial day after the company raised AU$6.5 million in its IPO. The company had sought to raise AU$6,500,000 at an issue price of AU$0.20 a share in its IPO.
Apart from this, shares of other ASX-listed uranium players, including Alligator Energy (ASX:AGE) and Toro Energy (ASX:TOE), remained stable on Thursday while Elevate Uranium (ASX:EL8) last traded at AU$0.48, up 2.13% on the last close.
The ongoing chaos between Russia and Ukraine has ignited concerns related to the future supply of various commodities, including uranium. However, uranium prices have tumbled significantly in the last one month on recession fears and dampened energy demand in China amid strict COVID-19 restrictions.