Commodities | Apr 14 2015
By Greg Peel
The Japanese Nuclear Regulation Authority announced last week it was “very close” to finalising its review of the Sendai units 1 and 2, which will be the first reactors to restart since the 2011 Fukushima disaster.
The restart of Japanese reactors will occur over a long period of time and the country will not fully restore its previous nuclear capacity, which provided around 30% of the country’s electricity supply. Aside from those reactors damaged beyond repair in the 2011 tsunami, others will be abandoned given the prohibitive cost of bringing them up to the new safety standards required by the regulator.
Nor does the Japanese government intend to return to 30% nuclear. Shinzo Abe is balancing popular opposition in Japan to nuclear energy per se with his country’s need to supplement the crippling cost of fossil fuel imports (albeit now a lot cheaper) if the economy is to be restored to growth. Last week the ruling party proposed to the prime minister that Japan generate 60% of its electricity from “stable” sources, which include nuclear but not less reliable renewables. However, renewables will form a significant part of Japan’s future energy mix.
Japan’s Ministry of Economy, Trade & Industry is reportedly considering a mid-20% level of renewable sources in the mix, up from 11% in FY14, and at least 20% nuclear.
One might assume news that the first Japanese reactor restarts are close provided a boost for the uranium market last week but this was not the case. Ostensibly, it is not “new news”, with mid-2015 long assumed as the first restart timetable by the market. Indeed, industry consultant TradeTech reports keen interest from the sellers last week, who became more aggressive on their offers as the week progressed.
Several transactions were concluded in the spot market towards the end of the week, and TradeTech has subsequently lowered its weekly spot price indicator by US30c to US$39.00/lb.
Two utilities continue to consider term delivery contract offers for a net 4mlbs of U3O8 equivalent, TradeTech reports, but there no were no term transactions concluded in the market last week. The consultant’s term price indicators remain unchanged at US$43.50/lb (mid) and US$50.00/lb (long).
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