home Supply, U A U.S. ban on Russian uranium could shape nuclear fuel markets for ‘years to come’

A U.S. ban on Russian uranium could shape nuclear fuel markets for ‘years to come’

The move could set uranium prices up for a return to $100 a pound or more: analyst

A ban on U.S. imports of Russian uranium is set to shake up the market for nuclear power, and lift prices back above $100 a pound for the nuclear fuel which has been tight on supplies.

“The Russia ban is a big deal,” said Jonathan Hinze, president at UxC, a nuclear-fuel market information and analysis firm. “It will shape the nuclear fuel markets for many years to come.”

The U.S. Senate on Tuesday passed the bill, which limits the importation of uranium from Russia into the United States. The House of Representatives had passed the bill in December 2023 and it will now be sent to President Joe Biden to be signed into law.

The bill the president will “soon sign into law,” together with the funding in the fiscal year 2024 budget, will “provide assurance to industry, allies, and partners that the U.S. has made a clear decision to establish a secure fuel supply chain, independent of adversarial influence, for decades to come,” said a White House National Security Council spokesman, in a statement emailed to MarketWatch Wednesday.

Importance of supply from Russia

The U.S. spends roughly $1 billion a year on nuclear fuel from Russia and its President Vladimir Putin has used his nation’s nuclear industry to fund the invasion of Ukraine, said Sen. John Barrasso, a Wyoming Republican.

Coal, oil, and natural gas imports were banned from Russia in the days following its invasion of Ukraine in February 2022, but what took so long for uranium imports to be included?” said Amir Adnani, president and chief executive officer of Uranium Energy Corp. (UEC).

“Similar to America’s reliance on China for rare earth and critical minerals, the U.S. grew overdependent on Russian nuclear fuel imports following the breakup of the Soviet Union,” he told MarketWatch.

The countries of Russia, Kazakhstan and Uzbekistan supply 50% of U.S. domestic nuclear reactor requirements, said Adnani. Also, “keep in mind that nuclear power provides 20% of American electricity.”

In 2022, Russia was the third largest provider of uranium to the U.S., after Canada and Kazakhstan, according to the Energy Information Administration, with 12% of total U.S. purchases of uranium in 2022 coming from Russia.

The U.S. imports the uranium material used in the nation’s nuclear power reactors because it’ s more “abundant and cheaper to produce” in other countries, the EIA said.

‘Unsettled’ waiver process

An article from World Nuclear News on Wednesday said that the Energy Department can waive the ban if it determines that “no alternative viable source of low-enriched uranium” is available to sustain the continued operation of a nuclear reactor or a U.S. nuclear energy company, or that importation of uranium is in the national interest.

The Energy Department’s waiver process remains “unsettled, so there’s no guarantee that U.S. utilities will definitely get all their Russian deliveries between now and the end of 2027, per the bill language,” said Hinze.

There is also the risk that “Russia counters with its own export ban that leads to more immediate cutoff” of uranium supplies, he said.

U.S. utilities, however, have had 21/2 years since the Russian invasion of Ukraine to “line up alternative supplies,” and many have, Adnani said. That’s “plenty of time to have addressed the risk.”

Price impact

Given all these uncertainties, Hinze said he expects “nuclear fuel prices…to potentially rise until we have better clarity.”

The ban had already been partially priced into the uranium market, but all of the implications have “yet to be fully appreciated,” he said.

Nuclear fuel prices may ‘potentially rise until we have better clarity.’Jonathan Hinze, UxC

He expects prices for uranium on the spot market to see some initial upward movement in response, as the ban, once it’s signed into law, “confirms the move away from Russia at a time when alternative supplies remain limited.”

Uranium prices had rallied early on this year, buoyed by tight supplies and expectations for rising demand.

Weekly spot uranium prices traded as high as $106 a pound as recently as the week ended Feb. 5, trading more than four times higher than the $25 value they saw at the start of 2020, according to data from UxC.

U.S. production of uranium concentrate in the fourth quarter of 2023 totaled 12,653 pounds, according to the EIA. That compares with total output of 27,012 pounds in the third quarter of last year.

A year earlier, in the fourth quarter of 2022, production was at 174,712 pounds, following the resumption of uranium output at the White Mesa Mill in Utah – the largest quarterly output since the fourth quarter of 2018.

U.S. and other uranium producers should benefit if prices climb, said Hinze, but he also said that he does not believe producers are in any position to increase production in the near future.

Even so, “utilities could now be further incentivized to promote domestic and other friendly nation uranium production through new long-term contracts,” he said.

“Right now, the alternatives are still limited, especially in the conversion and enrichment markets” for uranium, said Hinze.

Weekly uranium prices, as of the week ended Monday, were at $88 but on the spot market Wednesday, uranium prices have climbed well into the low $90s, with offers for the nuclear fuel being posted for $95 as of Wednesday morning, according to Hinze.

Prices are still well off the year-to-date high, but “could be moving back into the triple digits again,” he said.

Source: MarketWatch