Commodities | Feb 09 2016
By Greg Peel
In a relatively slow start to the new year, the month of January saw 2.9mlbs of U3O8 equivalent change hands in 17 transactions, industry consultant TradeTech reports, up from 2.2mlbs in December. An expected resurgence in end-user demand failed to materialise outside two utilities purchasing a total of 1.5mlbs.
Sellers remain confident demand will grow in 2016 and as such are in no real hurry to drop offer prices, but TradeTech reports that demand may not appear in earnest until later in the year. Some sellers were keen to offload material in January nonetheless, thus eroding an early rally in the spot price. By month-end, TradeTech’s weekly spot price indicator closed up US45c on end-December, at US$34.65/lb.
Demand is more skewed towards mid-term delivery than spot, and three transactions were concluded in the mid-term market in January, totalling 2.7mlbs. TradeTech lifted its month-end mid-term price indicator by US50c to US$36.50/lb.
The sellers became a little more anxious last week, TradeTech notes. Five spot transactions totalling 650,000lbs U3O8 equivalent were concluded, up from four transactions last week. TradeTech’s weekly spot price indicator has fallen US40c to US$34.15/lb.
One transaction totalling a mere 200,000lbs was reported in the mid-term market last week but there are two outstanding tenders for sizeable longer term volumes awaiting conclusion. TradeTech’s term price indicators remain unchanged at US$36.50/lb (mid) and US$44.00/lb (long).
In industry news, Japan marked the restart of a third reactor late in January. While three reactors is a far cry from Japan’s pre-Fukushima nuclear capacity, the country has now begun to lower the volume of LNG it has been forced to import as a replacement for lost power generation. LNG imports dropped 3.9% in 2015 from 2014 and the trend is expected to continue.
US power company Southern Co once suggested LNG was the obvious “dominant solution” for power generation as the industry transitions away from coal, but the company is also now considering nuclear power as part of its longer term baseload plans.
Meanwhile, cash-strapped Russia, suffering from the collapse in oil and gas prices, is looking to expand its domestic uranium production industry through tax incentives and the removal of red tape. Russia is building reactors for several countries across the globe but the government is also looking to diversify its commodity production base, it would seem.
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