Commodities | Aug 16 2016
The Ikata unit 3 reactor was restarted last week, bringing the number of currently operational reactors in Japan to three.
By Greg Peel
There have actually been five Japanese reactors restarted since the 2011 Fukushima disaster, but Takahama units 3 and 4 had to shut down again due to a court injunction issued against their operation. Sendai units 1 and 2 were the first to be restarted and remain in operation, while last week saw Shikoku Electric Co’s Ikata unit 3 restarted, bringing the current operating total to three.
To say the process of restart is painfully slow is more than an understatement. Most of the pain is being felt by the Japanese economy, given the high cost of importing fossil fuel alternatives for power generation. But the pain is being shared by global uranium producers, who never presumed it would take this long to get one of the world’s greatest consumers of uranium back up and running.
And still the count is three, out of a prior forty-odd.
In other incrementally good news last week, another major consumer of uranium – the US – is hopeful that the state of Illinois will follow in the footsteps of the state of New York in providing subsidy deals that will save the state’s struggling legacy reactors. The US federal government is eager to ensure nuclear energy remains a significant component of the push towards “greener” power generation, but the sheer cheapness of gas and a preference in subsidies for emission-free renewables has left older nuclear reactors out in the cold.
These demand-side developments did little to fire up the uranium market last week. The prior week saw market confusion as a US utility sought suppliers for the September delivery of anywhere between 100,000 and 1.2 million pounds of U3O8 equivalent, which hardly provides a clear picture on spot market demand. Last week saw that utility satisfied, but there is no word on the final volume.
Further utility demand is in the wings, but not yet prepared to step up to pay offer prices, industry consultant TradeTech notes. Nor are sellers too keen to hit lower bids. Hence only four transactions totalling 400,000lbs U3O8 equivalent were concluded in the spot market last week. Despite the stand-off, TradeTech’s weekly spot price indicator has fallen US65c to US$25.75/lb.
In the term market, a US utility selected a supplier for 800,000lbs U3O8 equivalent over 2018-20 last week and a small volume was contracted in the long term market. Another utility awaits offers for 2.6mlbs to be delivered over 2019-25 and further requests for term market contracts are expected to be made shortly.
TradeTech’s term market price indicators remain unchanged at US$27.40/lb (mid) and US$38.00/lb (long).
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.
