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Uranium Week: Activity Reawakens

Weekly Reports | Aug 27 2019

News that Kazakhstan intends to extend production reductions through 2021 sparked a return to buying interest in both the spot and term uranium markets last week.

-Kazatomprom extends production cuts
-Market interest returns after a dead August to date
-No new Japanese restarts in 2019

By Greg Peel

"Kazatomprom does not expect to return to full production until a sustained market recovery is evident, and demand and supply conditions signal a need for more uranium."

This official announcement last week from Kazakhstan's (mostly) state-owned uranium producer rekindled interest in uranium markets after activity had slowed to a grinding halt in August. Kazatomprom's production capacity is large enough for the company to be the swing factor in the global uranium demand/supply balance as OPEC once was in the global oil market.

The company announced it would extend its planned -20% production reduction through 2021.

For some time now the uranium market had assumed utility buying interest was just over the horizon, but recent weeks have seen a complete stalling of market activity. Firstly as participants awaited the president's decision on the section 232 recommendations from the Department of Commerce and again after the president rejected the recommendations and instead established a Working Group to examine the whole nuclear cycle in the US, from production to power generation. That report is still being awaited.

Last week nevertheless saw five transactions completed in the uranium spot market, industry consultant TradeTech reports, totalling 600,000lbs U3O8 equivalent. The bulk of buying interest came from traders, although several utilities are quietly making inquiries regarding potential spot purchases, TradeTech notes.

The consultant's weekly spot price indicator rose US40c to US$25.30/lb.

In term markets, four transactions were concluded involving deliveries of less than 500,000lbs in the mid-term. Again, traders and producers were the buyers, with utility buying yet to actually manifest.

TradeTech's term price indicators remain at US$28.50/lb (mid) and $31.00/lb (long).

Slow and Slower

Weighing on uranium markets beyond the initial impact of the Fukushima disaster of 2011 has been the extremely slow pace of restarts of Japanese reactors in the interim, pending safety upgrades and both regulatory and local government approval.

While another six reactors have passed initial regulatory approval and were expected to restart in 2019, stricter safety requirements and public opposition mean they are yet to do so and likely will not do so before year-end.

Meanwhile Tokyo Electric (Tepco) is reportedly submitting plans to decommission five units at its Kashiwazki-Kariwa nuclear facility. The company also has two new units ready to start but as yet has not received local prefecture government approval.

At least Bulgaria is planning to build two new reactors.

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