Commodities | Jul 19 2016
By Greg Peel
Because almost all currently reported spot uranium demand is discretionary in nature, buyers are increasingly willing to postpone buying activity in hopes of securing the lowest price possible, industry consultant TradeTech noted at the end of last week. As a result, sellers are finding they must cut prices significantly in order to close transactions.
Demand is languishing, and dramatic price swings are resulting from a thin market. Five transactions were reported in the uranium spot market last week totalling 500,000lbs. Sellers became increasingly anxious as the week wore on, resulting in a US$1.40 slide in TradeTech’s weekly spot price indicator to US$25.00/lb.
That’s a fresh low for the year, and the lowest spot price since April 2005.
One of the swing factors on the sluggish demand-side is the speed of Japanese reactor restarts, which currently is moving at a glacial pace. The Abe government would dearly like to restart as many reactors as quickly as possible to relieve the Japanese budget of expensive power generation alternatives, in the form of imported LNG and other fossil substitutes. But the national government’s desires are being hamstrung by local government, and specifically the lingering fear of nuclear power in post-Fukushima Japan.
Last week the Otsu District Court upheld an order to keep Kansai Electric Power Co’s Takahama units 3 and 4 shut down. The decision supports a petition signed by nearby residents. Kansai Electric will now need to appeal to the Osaka High Court for restart approval in a process that could last a year.
Meanwhile the company is importing oil, natural gas and coal in order to keep the electricity flowing.
There was one transaction reported in the uranium term markets last week, involving delivery beginning in 2020. TradeTech’s term price indicators remain unchanged at US$28.15/lb (mid) and US$40.00/lb (long).
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