Commodities | Nov 08 2016
By Greg Peel
The newly elected governor of Kagoshima Prefecture in Japan will not seek to block the restart of the Sendai unit 1 reactor once seasonal maintenance is completed. There ends the good news for the uranium industry last week.
In the US, the 43 year-old Fort Calhoun reactor in Nebraska will be shut down this month due to commercial non-viability, despite being licenced until 2033. And despite uranium prices being at twelve-year lows.
Three utilities entered the uranium spot market last week, industry consultant TradeTech reports. One decided to purchase, one postponed, and the other is still thinking about it. That about sums up the state of the market at present – the buyers are in no rush.
On the other hand, the sellers are becoming more desperate. The three utilities in question were encouraged into the market by another drop in TradeTech’s weekly uranium spot price to US$18.75/lb, where it stood at the end of October and the end of the week. That’s US$1.00 down for the week and US$3.50, or 15.7%, down from end-September.
Five transactions totalling 700,000lbs U3O8 equivalent were reported during the week. Over the month, buying interest was evidenced by a total of 6mlbs changing hands, but the buyers remain in the box seat.
Five transactions were reported in term markets over October, but only for the meagre sum of 2.1mlbs. TradeTech’s term price indicators have been lowered to US$20.50/lb (mid) from US$23.70/lb, and US$35.00 (long) from US$37.00/lb.
Over the course of 2016, traders and intermediaries, rather than utilities, have accounted for 67% of spot market buying interest, and 75% in the September quarter. Plunging spot prices are providing producers with heartache and utilities with a luxury but specifically they are piquing the interest of speculators. Just how much further can prices fall before supply is cut through further curtailments, shut downs and corporate failures?
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.
