Commodities | Apr 19 2016
By Greg Peel
Late last week a magnitude 6.2 earthquake hit Japan’s southernmost island, Kyushu, resulting in nine dead and more than a thousand injured and causing significant damage to homes and buildings. The only two reactors operating in Japan are on Kyushu, albeit 120kms away from the epicentre. No damage to Sendai units one and two is apparent but technicians are continuing their inspections nonetheless.
The quake was the biggest in magnitude to hit Japan since the 2011 quake that set off a tsunami and resulted in the Fukushima nuclear disaster. The Sendai units are the first and only reactors to have been restarted in that time. Even before last week’s quake hit, the second set of reactors slated for restart – Takahama units one and two — remained idle due to a court challenge of the country’s nuclear authority’s conclusion the reactors did not pose a safety risk.
One presumes this fresh quake will not help that argument, even if the Takahama units are found to be completely unscathed.
The uranium market had been struggling to find any meaningful demand support prior to last week. Industry consultant TradeTech’s spot price indicator had already drifted down US75c through the week before plunging a further US$2.25 on Friday as traders scrambled to dump material. The price plunge did manage to spark some interest from utilities on the buy-side, such that six transactions totalling 600,000lbs U3O8 equivalent were concluded.
TradeTech’s weekly spot price indicator is down US$3.00, or 10.5%, at US$25.50/lb, representing the lowest level since April 2005. The spot price is now down 25% in 2016 and TradeTech’s spot price indicator has exhibited a negative compound annual growth rate of -14.9% over the past five years.
Only one small transaction was reported in the term markets last week. There remain a number of delivery contracts out for tender but action on the settlement front continues to be exceedingly slow. TradeTech’s term price indicators remain unchanged at US$29.90/lb (mid) and US$43.00/lb (long).
Meanwhile, China has announced it is on the hunt to buy nuclear assets in uranium-rich countries such as Kazakhstan, Canada and Australia. If the price is right.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
