article 3 months old

Uranium Week: Stability Returns

Weekly Reports | Nov 22 2016

For once the spot uranium price did not fall over the week. Has a bottom been found?

By Greg Peel

There was no Uranium Week report published by FNArena last week due to the Veterans Day holiday in the US. In that week the spot uranium price fell US25c to US$18.50/lb, following a US$1.00 fall the week before.

Last week saw 750,000lbs U308 equivalent change hands in the uranium spot market in five transactions, industry consultant TradeTech reports. The consultant’s weekly spot price indicator is unchanged at US$18.50/lb.

Is this the bottom? Having plunged in October it appears the spot price has stabilised in November. Yet we have seen levels of stability before, and brief rallies, only to be consistently disappointed.

So we’ll reserve judgement for now, but suffice to say utilities are showing interest in picking up material at these low levels despite most being in no desperate need to rebuild inventories, while sellers are becoming increasingly reluctant to drop offers ever lower, TradeTech notes. Perhaps the desperate among the trading fraternity capitulated in October, but there are still producers burning cash who must continue to find buyers and hope that, eventually, prices will recover.

In uranium market news, the same themes are continuing to play out. Last week’s news leant mostly to the positive.

The Chinese government has formally released a five-year plan confirming the intention to have 30mkW of new nuclear capacity going into operation and over 30mkW under construction. To 2020, capacity will increase by 16.5% per annum.

In the US, energy company Exelon awaits key legislative decisions that would allow and justify the company’s acquisition of the Fitzpatrick nuclear plant in New York State and justify the continuing operation of the company’s Clinton (appropriate) and Quad Cities plants in Illinois. The decisions are important as in the wider scale, they would either save or sound the longer term death knell for the largest nuclear energy industry on the planet.

The issue remains the same – older nuclear plants cannot compete against cheap natural gas-fired electricity generators and despite being “green”, do not enjoy the same subsidies afforded alternative energy sources. Legislation is required at both state and federal levels, hence the word “appropriate”. What will be the approach of the Trump administration and Republican-led Congress?

In Japan, two more reactors have now reached the point of satisfying post-Fukushima safety rules – the biggest hurdle in moving towards restart. Now comes the political process, beginning at local government level, which experience suggests is no clear path.

There was one small transaction concluded in the uranium mid-term market last week. TradeTech’s term price indicators remain unchanged at US$20.50/lb (mid) and $35.00/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.

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms