Commodities | Sep 13 2016
Uranium prices remain persistently low while sellers who need to offload product continue to do so.
By Greg Peel
Industry consultant TradeTech’s weekly uranium spot price indicator finished the month of August at US$25.25/lb before ticking back up to US$25.50/lb by the Friday of that week. Last week the price ticked down again to US$25.25/lb by week’s end. FNArena’s published spot price thus suggests no change at that price.
Sellers of uranium currently fall into two camps, TradeTech suggests. On the one hand there are those who are not keen to chase ever lower prices, believing utility demand will quietly pick up. Moreover, there is more than one uranium market analyst suggesting spot prices cannot remain below the average cost of production, as it is now, for too much longer. Eventually the supply-side will have to surrender. To a greater extent than it already has.
On the other hand there are those sellers who simply need to offload product, and as such are prone to jumping on any little tick-up in price. Put the two together and we can see why the spot price has ticked up and back down again in the last couple of weeks.
Presumably at some point the desperate sellers will be cleaned out, but there is no sign as yet. There is some evidence of building utility demand, but nothing to quite write home about. Two utilities entered the market last week – one seeking 180,000lbs spot delivery and the other seeking 10% of its requirement for 2019-22 delivery.
The spot buyer was satisfied and three other spot transactions were concluded last week totalling 300,000lbs U3O8 equivalent.
There is no change to TradeTech’s term price indicators since the end of August, which were set at US$26.70/lb (mid) and US$38.00/lb (long).
There was some interesting news out of Japan this week. Shikoku Electric’s Ikata unit 3 resumed operation last week as planned to be the third reactor to be restarted in Japan since the Fukushima disaster, but for the fact the local governor has requested a temporary shutdown to Kyushu Electric’s Sendai units 1 and 2, the first two reactors to be restarted.
Kyushu Electric has rejected the request. However it is not quite an act of revolutionary defiance on the part of the power company. While the governor called the rejection “very regrettable”, he did acknowledge both reactors are shortly scheduled for routine maintenance shutdowns of two months in duration.
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