Putin's words stir up the international commodity and stock markets!
Recently, Russian President Putin stated that the Russian government may consider restricting exports of uranium, titanium, and nickel. After the news spread, there were fluctuations in the global stock and futures markets.
On Wednesday, in the US stock market, uranium mining stocks collectively rose sharply, with Uranium Energy up over 12%, Encore Energy and Centrus Energy both up nearly 10%, Energy Fuels up over 8%, and Denison Mining up nearly 7%. In the futures market, LME nickel futures rose by over 2%, and the main contract for Shanghai nickel also rose by over 3% during today's trading session.
So, how much impact will this matter have? Some analysts said that since the outbreak of the Russia-Ukraine conflict, western countries have significantly reduced their purchases of Russian oil and natural gas, but Russia is still the main metal supplier in the world market, so cutting or stopping exports may cause the risk of supply interruption of related products.
Putin Speaks
Russia may need to take action on some strategic raw materials.
On September 11th, Putin stated that Russia is a world leader in various raw material reserves and should consider restricting exports of uranium, titanium, and nickel, but not at the expense of its own interests.
During a meeting with members of the Russian government, Putin said, "Russia is in a leading position in the reserve of various strategic raw materials. We supply these materials in large quantities to the world market, and the supply of some commodities is limited to us. Perhaps we should consider implementing certain restrictions - such as uranium, titanium, nickel
Russia is a leader in strategic raw material reserves such as uranium, titanium, nickel, etc. "Putin said that due to Western sanctions restricting the export of some Russian goods such as diamonds," perhaps we should also consider restrictions.
Putin said, "Of course, we cannot do anything that is detrimental to ourselves. But some countries are building strategic reserves and taking some other measures. Overall, if this does not have a negative impact on us, we can consider it. I am not saying that we need to do it tomorrow, but we can indeed consider imposing export restrictions on external markets, not only for the goods I mentioned, but also for some other goods
Putin pointed out that Russia has about 22% of the world's natural gas reserves, about 23% of its gold reserves, and nearly 55% of its diamond reserves.
According to the Russian news agency Sputnik, Putin gave instructions at a cabinet meeting on September 11th to consider the idea of establishing a raw material alliance and regulating the mineral market. Russian Minister of Natural Resources Kozlov stated that Russia holds 55% of the world's diamond reserves, 46% of palladium reserves, and 23% of gold reserves. Overall, it has the potential to establish a raw material alliance, which can then grasp and regulate the world market.
How significant is the impact?
Russia exports a significant portion of its nickel, titanium, and uranium production. After Putin's remarks, nickel prices on the London Metal Exchange rose 2.35% on Wednesday, to $16112 per ton. Today, the main contract for Shanghai nickel also rose by over 3% during trading. Data shows that over one-fifth of nickel in LME registered warehouses comes from Russia, a metal used in batteries and alloys with a wide range of applications, including armor coatings and turbine blades.
Russia is the world's fourth largest uranium producer, with approximately 44% of the world's uranium enrichment capacity. The stock market has reacted more strongly to Putin's latest speech. On Wednesday, uranium concept stocks in the US stock market surged, with Uranium Energy up over 12% as of the close, Centrus Energy and Encore Energy both up nearly 10%, Energy Fuels up over 8%, BURG up over 7%, Denison Mining up 6.71%, and Cameco and Uranium Royalty up over 6%.
According to foreign media reports, since the Russia-Ukraine conflict in 2022, the United States and the European Union have imposed a number of sanctions on the Russian economy, including sanctions on some metal and mining companies. However, many commodities, including palladium, have not been significantly restricted and continue to be shipped to Western markets.
Although the London Metal Exchange banned the delivery of new Russian nickel and aluminum in April following sanctions imposed by the United States and the United Kingdom, Russia sold most of its products to end-users. The United States also banned the import of Russian uranium and newly produced nickel, copper, and aluminum this year. Russian mining giant MMC Norilsk Nickel PJSC is not subject to sanctions from the United States or the United Kingdom and is the world's largest producer of refined nickel.
Russia is also the world's largest exporter of nuclear fuel and technology. In addition to uranium mining assets in Russia and Kazakhstan, nuclear energy giant Rosatom also controls nearly half of the global enrichment capacity needed to convert ore into energy.
In May of this year, US President Biden signed a bill banning the import of enriched uranium from Russia, which is worth approximately $1 billion annually. However, it includes exemptions on supply issues, which will enable the US Department of Energy to maintain normal levels of Russian uranium imports until 2027.
Last year, Russia accounted for 27% of the enriched uranium supply for commercial nuclear reactors in the United States. Citigroup analyst Arkady Gevorkyan said, "This will be difficult to replace, especially in the short term, that is, in the next 2-3 years." Arkady Gevorkyan said that Western uranium enrichment companies only plan to build additional enrichment capabilities, which will take at least three years to complete.
Huatai Securities recently pointed out in a research report that energy transition and energy security are intertwined, coupled with AI driven electricity demand, and the global nuclear power revival has begun. According to statistics, the annual average new installed capacity of nuclear power worldwide from 2024 to 2035 can reach 15GW-18GW/year, and it is predicted that the corresponding natural uranium demand will be stable, with a compound annual growth rate of about 3%. Before 2030, demand may be driven by countries such as China, Russia, and India. After 2030, the restart of nuclear power and the construction of small reactors in Europe, America, Japan, and South Korea may bring about secondary growth. Due to a sustained tight supply and demand situation, there may be a 10% gap between natural uranium ore supply and demand, coupled with a downward marginal secondary supply, resulting in a tight balance between natural uranium supply and demand. Supply side disturbances will bring about price fluctuations. I am optimistic that the structural price increase of nuclear power in the United States will catalyze a marginal rise in uranium prices. China International Capital Corporation (CICC) previously stated that global demand for nuclear power is improving and low-cost uranium resources are limited, which could lead to an increase in uranium prices.
In addition, Russia is also the world's third largest producer of sponge titanium, which is converted into metal for industrial applications in aerospace, marine, and automotive industries, but its own titanium mineral reserves are relatively low.
VSMPO Avisma, Russia's largest titanium sponge manufacturer, was partially owned by Rostec, a sanctioned defense group, and supplied titanium to Boeing and Airbus before the Russia-Ukraine conflict.
Canada has imposed sanctions on VSMPO Avisma, but has granted Airbus an exemption to use Russian titanium in its manufacturing. In 2022, less than two weeks after the conflict with Ukraine, Boeing stopped purchasing titanium from Russia. According to Russian customs data, the United States is still purchasing Russian titanium, but the largest buyers are France, Germany, and others.