By Greg Peel

Industry consultant TradeTech puts the drop in uranium market liquidity and price in 2014 down to the withdrawal of investment banks Goldman Sachs and Deutsche Bank from the market as trading intermediaries, following a change to US Federal Reserve regulations. Otherwise, external influences on the market in the year to date have arguably underscored a case for more positive activity and prices.

On the supply side, the Russian HEU agreement ended last year, existing producers have been limiting or mothballing production, new production plans have been shelved, and there remains a risk sanctions will be imposed on exports of Russian enriched uranium. On the demand side, Japan is close to restarting its nuclear reactors and China is ramping up its reactor construction a-pace. After three years in the post Fukushima doldrums, everything has been pointing to a long awaited rebound in price and liquidity.

But the opposite has been true. Nothing is more telling than last week’s spot market activity, which saw only three transactions and a drop in price of US75c, on TradeTech’s spot price indicator, to a new eight-year low of US$32.50/lb.

It makes sense that producers are keen to sell product expediently at spot, given current prices are rendering many cash negative on production. It makes sense that traders and speculators may have been caught long on expectations of price rebound and are now trying to bail. What doesn’t make a lot of sense is why utilities are not in there buying at these bargain basement prices. The answer may lie in the fact utilities maintain sufficient stockpiles in case of future supply shocks and hence are not about to run out of fuel, and had already picked up excess Japanese supply, but at some point a restocking phase must begin.

That liquidity in the spot market should wane is of no great surprise. Typically the “real” players – producers and utilities – only enter the spot market on occasion to top up short falls or let go some excess supply. The term contract market is where the vast bulk of deals are transacted. Spot market activity only expanded during the Chinese super-cycle years pre-GFC, when suddenly every hedge fund and intermediary wanted to play. The spot uranium bubble actually burst before the GFC, and Fukushima went a long way to killing off speculative interest altogether. Goldman and Deutsche may have had other incentives to leave, but a lack of market interest would probably have provided impetus.

Yet there’s been little activity in the term market of late as well. Term prices have also drifted lower, and this week are unchanged at US$37.00/lb (mid) and US$45.00/lb (long) on TradeTech’s indicators. There has been plenty of apparent interest in term supply contracts shown by utilities more recently, indeed one is awaiting offers for a 7mlb contract over multiple delivery periods in 2016-25, but few transactions concluded.

Maybe one utility will soon blink, and a scramble will ensue.

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By Greg Peel

The restart of the first Japanese nuclear reactor moved closer to reality last week with the approval of the government’s new 20-year energy policy which declares nuclear power to be one of the country’s key baseload electricity sources. The government will promote the reactivation of nuclear reactors, the policy states, assuming they satisfy the new safety guidelines.

Seventeen of Japan’s 48 idled reactors have filed for restart approval and it was hoped the first of these, Units 1 and 2 and Sendai in southern Japan, would be ready by June 30 to cope with the summer electricity demand surge. However even if operator Kyushu Electric has received government endorsement and regulatory safety approval, it still needs approval from both the provincial and local governments, hence several meetings are now to be held. Uranium industry consultant TradeTech thus believes the first restart is likely to occur later in the year.

The uranium industry has been waiting for news of the first Japanese restart ever since an Abe government was seen as inevitable late in 2012. Progress has been glacial and anti-nuclear protest has been powerful but in theory, here we are. The first reactor may not start till later this year but it is assumed restarts will then flow one after the other, and markets pre-empt such milestones rather than wait for them to actually happen. For two years industry analysts have been suggesting that once Japan’s nuclear future is restored, the uranium price must finally recover.

The other developing factor threatening to impact on uranium demand is that of the escalating Ukraine-Russia conflict. Were the West to step up its sanctions against Russia to a more meaningful level this could well include a ban on imported Russian enriched uranium, leaving a big hole in global supply of enriched reactor fuel. This threat is provoking US utilities to consider pre-purchasing supplies in case the sanctions come to be.

The scene is thus set for a realistic bounce in the spot uranium price from its eight-year lows. But what did the spot price do last week? It fell US50c to US$33.25/lb on TradeTech’s weekly spot price indicator.

There may be some supply anxiety among utilities, but there appears to be no sense of urgency just yet. Meanwhile with the price of uranium trading below the average global cost of production, sellers remain desperate to generate cash. At least one big seller was actively seeking buyers last week, TradeTech reports. Five transactions totalling 500,000lbs of U3O8 equivalent were conducted in the spot market last week,  and by week’s end the price had fallen as low as levels not seen since November 2005.

There were no transactions conducted in the term market. TradeTech’s term price indicators remain at US$37/lb (mid) and US$45/lb (long).

The industry gathered in San Francisco last week for the annual World Nuclear Fuel Cycle conference. While the mood was understandably solemn, TradeTech notes, given uranium price weakness, there was optimism that the nuclear power industry’s current situation will eventually improve in the long term.

CIMB believes the spot uranium market will begin to tighten over the next couple of years. CIMB analysts have modelled global mine supply and nuclear demand from the bottom up.

They forecast global nuclear power capacity to increase at a compound annual growth rate of 2.0% from 2012 to 2022. The analysts are sceptical that China can actually achieve its ambitious goal of 58GW of nuclear power generation by 2020, but believe Chinese nuclear capacity will triple by that time nonetheless. They also assume the restart of Japan’s west coast reactors over the next four years.

CIMB is forecasting a recovery in the spot uranium price to US$47.50/lb by end-2015. The recovery will be tempered by the extent of existing global inventories, the analysts admit, but price sentiment should improve on a recovery in the term contract market.

The recovery will not, however, be long lasting under CIMB’s modelling. Despite recent voluntary cuts to supply, including Paladin Energy’s ((PDN)) Kayelekeera mine in Malawi being placed into care & maintenance, and despite the end of the Russian HEU supply agreement, CIMB sees the global uranium market drifting back in to surplus by 2016. The analysts forecast a compound annual growth rate of supply of 2.5% in 2012-22, with increases driven by Kazakh mines reaching production capacity, Cameco’s Cigar Lake ramping up in Canada and the construction of new projects in Namibia.

In the meantime, UBS is the most recent of brokers to mark uranium prices to market for the purpose of producer valuations. The broker has cut its 2014 average price forecast to US$39/lb from US$43/lb previously.
 

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By Greg Peel

The departure of once significant uranium spot market intermediaries Goldman Sachs and Deutsche Bank from the uranium market, encouraged by a US Federal Reserve crackdown on physical commodity and warehousing, is having an impact, industry consultant TradeTech admits. The impact is not surprising although it did appear briefly as if other non-investment bank intermediaries were rising to fill the gap, but activity has continued to dwindle.

A total of 19 transactions were completed in the spot market in the month of March, totalling 3.2mlbs of U3O8 equivalent, bringing to 9mlbs the total for the March quarter. In the March quarter 2011, 18mlbs changed hands. The Japanese tsunami hit in March 2011 and by the March quarter 2012, volumes had plummeted to 7mlbs. This improved to 10.5mlbs in 2012 which is why it is so disappointing to see volumes falling back again this March quarter. In 2013 there was much anticipation of a Japanese reactor restart under the new Abe government which would conspire with the end of the Russian HEU agreement to reignite uranium prices. A year later and the market is hoping for the first restart soon…ish. Meanwhile, supply-side restraints, including abandoned production in the low price environment, have failed to have any upside impact on prices.

TradeTech’s monthly spot price indicator fell to US$34.00/lb at end-March, down from US$35.25 at end-February.

While there has been an increase in utility bidding interest for delivery contracts in the term market of late, “traders and producers are competing aggressively for each potential new term sales contract, “TradeTech reports, “whether in the mid- or long-term arenas”. The consultant has lowered its term price indicators to US$37.00/lb at end-March from US$37.75/lb end-February for mid-term contracts and US$45.00/lb from US$50.00/lb for long-term contracts.

Ux Consulting has lowered its (one) term price to US$47.00/lb, down from US$50.00/lb, representing the lowest level in eight years.

The scene has not improved in the first week of April. Five transactions totalling 500,000lbs of U3O8 equivalent were conducted in the spot market last week and TradeTech has lowered its weekly price indicator by US25c to US$33.75/lb, while Ux has lowered its equivalent US70c to US$34.00/lb.

Things in Japan continue to move slowly. Weeks of debate between the Japanese ruling party, the Liberal Democratic Party, and junior coalition partner New Komeito over the government’s new draft energy policy have now concluded. The parties will now break to hold meetings with their own members to discuss the proposal before it is sent to Cabinet for approval. The draft describes nuclear energy as “an important base-load energy source”.

Meanwhile, the rest of the world’s financial markets may have moved on from fears over the implications of Russia’s annexation of Crimea but concerns are still lingering in the uranium market. Ux Consulting argues that the drop in term prices at least suggests sales to utilities are on the rise, and this rise in demand, if not price, is put down to concerns over a potential global supply disruption.

Russia has already increased its natural gas sales price to Ukraine by 50%, notes TradeTech. Ukraine may not feature atop the list of major world economies but it does happen to maintain the world’s fourteenth largest electricity generation capacity. Of that capacity, 45% is nuclear, but is dependent upon Russia to provide the fuel. On the strength of Russia’s natural gas price hike, one presumes the Ukraine would be holding its breath with regard to uranium except for one catch. Crimea sources all of its electricity from Ukraine.

Outside of the FSU, wider implications are afoot. Russia happens to be one of the world’s leading constructors of nuclear reactors for foreign customers, as well as project financiers and suppliers of fuel. A large share of the world’s enrichment market is held by Russia. While only 18 of the 131 operating reactors in the European Union are directly supplied by Russia, Russian enrichment capacity represents 41% of the total EU enrichment market, TradeTech notes. And 42% of the US market.

Thus were US/EU sanctions imposed on Russia in the wake of Crimea to be extended beyond the current visa ban/asset freeze triviality, the potential for global nuclear fuel supply disruption on a tit for tat basis is heightened.

Interestingly, while Russia may dominate global uranium enrichment it accounted for only 4.9% of actual uranium production in 2013. At 36.5%, Kazakhstan dominated global supply last year, followed by Canada (15.4%) and Australia (12.0%), notes financial advisor Raymond James.
 

Kazakhstan has indicated it will keep output steady this year, despite the capacity to increase, if prices stay low. State-owned Kazatomprom has nevertheless warned it expects a big increase in reserves, in which case the supplier will potentially keep a controlling lid on any price increases which eventually occur as it works this inventory out.

Kazatomprom was the world’s second largest individual producer of uranium in 2013 at 16.0%, notes Raymond James, behind France's Areva (16.7%). Of total global uranium production, only nine companies currently account for around 90%. After Kazatomprom comes Canada’s Cameco at 14.5% and Russia/Canada’s ARMZ/U1 at 13.0% before a run of three (or should that be four) Australians. Production from Rio Tinto ((RIO)) and two-thirds Rio owned Energy Resources of Australia ((ERA)) is combined to represent 9.3%, while BHP Billiton ((BHP)) comes in at 5.9% and Paladin Energy ((PDN)) 5.2%, although Paladin has since placed its Kayekeleera  operation in Malawi into care and maintenance.

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

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By Greg Peel

Suppliers are becoming increasingly bearish on the outlook for uranium prices, industry consultant TradeTech suggests. Last week was another in which traditional spot market sellers cut prices further as the week progressed in order to find any buying interest. A total of five transactions totalling 800,000lbs of U3O8 equivalent were reported and TradeTech’s spot price indicator ended the week down US60c to US$34.00/lb.

There has a been a lot of talk of potential uranium supply sanctions being imposed against Russia in the wake of the Crimean annexation, but last weekend’s diplomatic discussions between Presidents Putin and Obama may go some way to allaying those concerns. The British government is nevertheless said to be reviewing an agreement signed last year with Russian state-owned Rosatom which would have seen the Russians building nuclear reactors in the UK.

In supply-side news, Duke Energy in the US has asked for bids for 75 nuclear fuel assemblies which are being sold now the company has decided to retire rather than repair its Crystal River plant, constructed in 1977. While Duke will only sell to federally licenced US nuclear power plants and/or nuclear fuel fabricators, the implication of the offer is there is yet more uranium needing a home.

Energy Resources of Australia ((ERA)) has been building a large uranium inventory since its Ranger mine was shut down due to a leak in a leach tank but processing operations should begin again soon now the leaking tank has been removed. ERA is holding enough inventory to meet all sales commitments in the first half of 2014.

And just to add to global oversupply, Australia’s Four Mile Mine in South Australia, granted government approval several years ago to become the country’s fifth uranium mine, is expected to commence production in April, subject to regulatory approval.

There is at least some good news on the demand side. Unit 1 at China’s Yangjiang nuclear plant in Guangdong has begun operation. Yangjiang is the largest nuclear construction site in the world with a further five units under various stages of construction.

TradeTech reports no transactions in the term market last week. The consultant’s term price indicators remain at US$37.75/lb (mid) and US$50.00/lb (long).
 

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By Greg Peel

Only four transactions totalling 500,000lbs of U3O8 equivalent were conducted in the spot uranium market last week. Industry consultant TradeTech notes year to date volumes, at just 7.4mlbs, are down 32% on the same time last year. The ongoing lack of buyer urgency saw TradeTech’s spot price indicator fall another US15c to US$34.60/lb.

Following the closure of Paladin Energy’s ((PDN)) Kayelekera mine in Malawi, BA-Merrill Lynch now believes supply from similar new projects in Africa will be shut down for the balance of the decade. Such projects, including Imouraren in Niger, Trekkopje in Namibia and Mkuju River in Tanzania require a long term uranium price well above the broker’s estimate to cover the cost of production. This withdrawal of supply will not upset the balance in the shorter term given the extent of Japan’s stockpiles, Merrills suggests.

The broker sees a balanced uranium market until 2016. Thereafter, a lack of investment in new deposits could lead to a yearly deficit of nearly 20mlbs by 2020. Critical to global demand-supply is the restart of Japanese reactors, progress in which has been slower than the broker expected.

So far 17 of Japan’s 44 idled reactors have applied to the regulator for restart, representing around 8.2mlbs of uranium demand. Merrills expects the first restarts in the second half of 2014 and the Japanese government sees the potential for up to ten restarts by year-end. Brokers have long seen the first Japanese restarts as the impetus for the uranium market to overcome its malaise, but even with the first of these in sight a well supplied market has meant little price improvement.

As a result, Merrills has lowered its 2014 spot price forecast by 3.2% to US$45.00/lb and its term price forecast by 4.1% to US$58.75/lb. The broker’s 2015 spot price forecast falls to US$63.75/lb from US$66.25/lb while a long term forecast price of US$67.85/lb is maintained.

There were no transactions in the term market last week and TradeTech’s term price indicators remain unchanged at US$37.75/lb (mid) and US$50.00/lb (long).

Despite its downgrades, Merrills remains long term positive on uranium’s fundamentals, citing the end of the Russian HEU supply agreement, the renewed commitment to nuclear power from Japan and Chinese aggressive construction of new reactors as prime drivers. Adding to the equation is a long term nuclear energy plan now formally adopted by South Korea and Russia’s stated intention to build 28 new reactors by 2030.

In the shorter term, US power companies have been concerned current sanctions against Russia as a response to the Crimea annexation might be extended to the export of Russian nuclear fuel supplies. However, US enrichment facilities have assured the market there is more than enough supply to cover any shortfalls.

And that about sums up the state of the uranium market at present.

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By Greg Peel

Last week saw the third anniversary of the Fukushima nuclear disaster which turned the global uranium market upside down. Prior to the disaster, the spot uranium price had spent 2010 rallying from a post-GFC low around US$40/lb to over US$70/lb as the world looked increasingly toward a nuclear future, led by China. The disaster saw the price fall quickly to US$50/lb as Japan shut down its 48 reactors on safety concerns.

With Japan reliant on nuclear energy for 30% of its electricity generation, it was assumed the country’s reactors would not be shut down for terribly long, but rising popular protest against the dangers of nuclear energy complicated the matter. While protest remains vigilant, the cost of replacement fossil fuels, particularly natural gas, for electricity generation has blown out Japan’s trade balance at a time the new government is attempting to reignite the country’s export economy. Add in the additional cost to households, and the Japanese people have begun to relent.

Shinzo Abe has stated he intends to release a “realistic and balanced” energy strategy this spring, likely at the end of March. The government hopes to restart ten of Japan’s reactors by December to cope with the seasonal summer surge in energy demand.

The global uranium market has waited three years for the first Japanese restart and despite this now appearing at least imminent, the spot uranium price is failing to respond. Last week again saw little activity and no urgency from buyers, forcing a handful of sellers to accept lower prices. Four transactions totalling 800,000lbs U3O8 equivalent were conducted, reports industry consultant TradeTech, and TradeTech has reduced its weekly spot price indicator by US25c to US$35.75/lb.

No transactions were reported in the term market and TradeTech’s term price indicators remain unchanged at US$37.75/lb (mid) and US$50.00/lb (long).

In supply-side news, the first ore has now been produced at Cameco’s massive Cigar Lake project in Canada. First production has taken nine years due to flooding incidents in both 2006 and 2008, although a subdued uranium market in recent years has no doubt impacted on Cameco’s urgency.

In demand-side news, China is reportedly now on track to surpass its earlier 2020 nuclear power goals despite new Chinese reactor projects being suspended following the Fukushima accident and more stringent safety requirements being imposed. In 2013, approximately 10% of China’s electricity demand was supplied by non-fossil fuel sources and the goal is for that level to hit 15% by 2020. The Chinese National Nuclear Corp now suggests 20 or more new reactors could be built in the next six years.

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By Greg Peel

While the Japanese prime minister has recently reaffirmed the country’s commitment to nuclear energy after two years of market anticipation (and the third anniversary of the Fukushima disaster now passed), the reaffirmation has come across as more “motherhood” than suggesting any renewed urgency to speed up reactor restarts. The market’s mood may brighten when the first Japanese reactor does actually restart at some point this year, but until then there are no signs near term demand for uranium is about to pick up.

The Ukraine situation also impacted on market sentiment last week, more as an uncertainty factor than any specific risk to demand. Half of the country’s electricity supply is provided by its 15 nuclear reactors which state-owned operator Energaotom has ensured are “vigorously protected” and well stocked with supplies. The Ukrainian nuclear authority did initially ban exports of nuclear fuel from Russia to foreign customers further afield across Ukrainian rail lines, but this was more of a safety measure when Kiev was beset with protests rather than any act of sanction. The ban has since been lifted.

The upshot is that sellers of uranium became a little more skittish earlier in the week and subsequent rushed sales affected a sharp drop in the uranium spot price, but after six transactions totalling 1mlbs U3O8 equivalent the week ended with industry consultant TradeTech’s spot price indicator down only US25c to US$35.00/lb. The buyers are there, including utilities and the enigmatic speculative buyer of 1mlbs, but they are in no rush.

Meanwhile, news from the US suggests issues on both the demand and the supply side of that country’s uranium industry. Uranium enricher USEC has filed for bankruptcy, although the company’s plan is to restructure its debt under Chapter 11. It is understandable that an enricher should be impacted by low uranium prices, but one might not expect a utility to be struggling when fuel is so cheap. Yet that is the case for Exelon, operator of the largest fleet of US nuclear power plants.

Exelon has claimed the current market conditions do not reward its facilities for the environmental and reliability benefits they provide, and that without new legislation the company would be forced to shut down up to half its plants.

Uncertainty still holds sway over the uranium market, as all of the above might attest. JP Morgan is one broker who has long forecast an imminent tightening in the market and a resultant price increase but now JP Morgan, too, has backed off. The broker still believes the market will improve in the medium term but concedes a global inventory overhang means this is not going to happen any time soon.

The argument for a price recovery continues to build, as JP Morgan notes. On the supply side, not only are new uranium projects being curtailed at current price levels but existing projects are being shut down for the time being as well, including Paladin Energy’s ((PDN)) Kayelekera mine in Malawi and Uranium One’s Honeymoon mine in Australia, and the Russian HEU contract has ended. On the demand side, China is still buying uranium in substantial quantity and Japan has at the very least committed to a nuclear future.

Yet the broker is now forced to wind back its price recovery expectations and lower its near term price forecasts. The year-end forecast drops 10% to US$45/lb to render a 2014 average price of US$40.30/lb, down 11 % from the previous forecast, while the 2015 average forecast price is lowered 17% to US$50/lb.

TradeTech’s term price indicators remained unchanged last week at US$37.75/lb (mid) and US$50.00/lb (long).
 

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By Greg Peel

The state of the global uranium market at present is one of unhurried buyers and frustrated sellers. Last week represented the end of a month which featured discretionary buying from utilities and as yet no action from the speculative buyer who is supposedly looking for 1mlbs of U3O8.

Eventually operating utilities will need to be more urgent in their demand, given they have largely stood back for some time as the spot price has wallowed given no pressing need to refresh stockpiles. But eventually inventories will run low. As industry consultant TradeTech reports, the past month was again one of utilities picking at offers but not chasing sellers who backed off in the hope prices were about to start rising again. The big speculative buyer entered the market last year, then withdrew, and came back again this year, but appears as yet unmoved.

Spot market activity thus slowed in February with only 2.0mlbs of U3O8 equivalent changing hands compared to 3.7mlbs in January. Only when frustrated sellers capitulated did trades occur. The market continues also to be disrupted by tyranny of distance, with North American product being offered at prices less than European buyers are prepared to pay. The difference is not enough to warrant seaborne trade.

Given sellers became more willing to lower their prices as the month came to a close, TradeTech’s weekly spot price indicator fell another US25c last week to US$35.25/lb, down US15c from end-January.

The term market saw three transactions in February, all in the “mid” range. The departure earlier in the year of two of the most active term market intermediaries – Goldman Sachs and Deutsche Bank – was expected to place upward pressure on prices but this has not proven the case, TradeTech reports, as other traders and producers have shown to be competitive enough to keep the market stable.

TradeTech has dropped its term price indicator by US75c to US$37.75/lb, while its long term indicator remains unchanged at US$50.00/lb.

It is little wonder uranium traders are frustrated, given general market news over the course of 2014 to date has suggested uranium prices really should have started to rebound. Aside from various supply constraints and abandoned projects, developments in Japan – the hinge in the global uranium outlook – have been positive from a price expectation point of view.

The Japanese government released a draft proposal on February 25 which strengthened its commitment to nuclear power, suggesting the country will continue to rely on nuclear power as a central part of its energy policy. There may nevertheless have been a modicum of industry disappointment stemming from the proposal, given that Prime Minister Abe’s focus had previously centred around the short term while the proposal is clearly more focused on the long term.

The 20-year plan implies that while Japan may now be at the beginning of a nuclear power revival, demand is unlikely to pick up in the immediate future.

Aside from this observation, the analysts at Macquarie have also been looking into the Chinese demand picture.

China’s January trade data showed uranium concentrate imports totalling 1930tU, which is 22% higher than the average monthly import level of 2013. In 2013, China’s total imports reached a record level of 18,968tU. This rate of purchase ran significantly ahead of actual current reactor requirements, Macquarie notes, and if January is any indication, Chinese inventories will increase even further in 2014.

What might be China’s motivation?

Firstly, Macquarie points out, China is looking to rapidly expand its nuclear capacity (no great surprise for anyone who has seen pictures of the smog in China’s cities this past week), to 50GW in 2017 from 14.6GW currently. Secondly, China’s own domestic production has proven to be unreliable within such an expansion plan, given inefficiencies, low grades and slow expansion.

While these suggestions make sense, we also know, as Macquarie acknowledges, that China has a well-established history of taking advantage of periods of low prices for any commodity and building stockpiles upon stockpiles to hold for future use. State-owned enterprises make such a policy possible, and also lead to lengthy and often market-disturbing cycles of stocking and destocking. Since 2006, Macquarie calculates, China has amassed enough uranium to meet current consumption rates eight times.

So while there is presently no end in sight to China’s voracious uranium demand, as January imports would attest, at some point China is going to decide it has enough. If this occurs before demand from other major consumers starts picking up, Macquarie warns (and presumably this is a nod to Japan), look out.
 

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By Greg Peel

The good news is utilities are back in the market buying uranium in 2014 after sitting back on their inventories in 2013 as prices wallowed. The bad news is they are in no great rush to secure large volumes, although declining supply commitments do prompt some necessity.

Last week saw six transactions completed in the spot market totalling 650,000lbs of U3O8 equivalent, industry consultant TradeTech reports. This takes year to date volumes to 5.5mlbs compared to 6.4mlbs at the same point last year, but well above the 2.6mlbs traded in a very uncertain 2012.

As has been the case in the past, delivery location preference is currently fracturing the market and impacting on pricing. Prices bid for European delivery exceed those offered for US delivery. This fracture has conspired to keep TradeTech’s spot price indicator contained, and it registered a US15c fall to US$35.50/lb last week.

News from Japan is that the country’s regulator is close to ruling on safety standards at one or more idled reactors, which would clear the way for the first post-Fukushima restart. The regulator is expected to narrow the list of potentials from six undergoing safety checks within two to three weeks. Safety inspections were originally intended to be completed by end-March but this target will not be met. There are seventeen reactors under review for a possible restart by year-end.

Shinzo Abe’s government will reportedly weave nuclear power into its mid-term energy policy, TradeTech notes, citing it as an important baseload energy source. The new plan is expected to be approved at a cabinet meeting next month.

Two transactions were conducted in the mid-term market last week, Trade Tech reports, and further offers are sought for term delivery by US and non-US utilities. TradeTech’s term price indicators remain unchanged at US$38.50/lb (mid) and US$50.00/lb (long).

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By Greg Peel

Canada’s global uranium major, Cameco, last week reported record production of 23.6mlbs of U3O8 in 2013, up from 21.9mlbs in 2012. However in line with uninspiring global uranium demand, Cameco’s total sales volume was static in 2013 from 2012.

Cameco is subsequently pulling back its mid-term production target and abandoning its 2018 supply goal of 36mlbs. The company suggested it continues to like the long term outlook for the industry but acknowledged the near and medium term pictures remain unclear. That said, Cameco still intends to bring its long-delayed and substantial Cigar Lake mine into production this quarter, with processing to begin next quarter.

Cameco’s news highlights the issue of current oversupply in the global uranium market while demand remains uncertain. Global swing producer Kazakhstan is limiting its production below capacity as a result, while Australian and other producers have shut down mines. Much still rests on a long awaited nuclear policy decision out of Tokyo.

To that end, the people of Tokyo went to the polls last week to elect their governor. Several candidates ran on anti-nuclear platforms but exit polls suggested only 23% support for immediate denuclearisation, industry consultant TradeTech reports. The majority of voters favoured a gradual approach to nuclear power, which was reflected in the election being won by a former cabinet minister and pro-nuclear candidate.

The Tokyo election provides pro-nuclear prime minster Shinzo Abe with an important gauge of popular opinion at a time when the extensive cost of alternative fossil fuel imports is undermining Abe’s aggressive economic revitalisation policy. In the face of apparent majority anti-nuclear views among the Japanese in 2013, the Abe government has held back on defining a specific post-Fukushima strategy. Meanwhile, nevertheless, safety tests at Japan’s idled reactors continue.

Last week Japan’s Ohi plant was cleared of seismic risk by the country’s Nuclear Regulation Authority, making it the first reactor to receive such clearance since the Fukushima accident.

As uncertainty continues to hold sway in the global uranium market, activity in the sport market remains muted. Last week saw 550,000lbs of U3O8 equivalent change hands, TradeTech reports, compared to 600,000lbs the week before. Market participants are closely watching for signs that the institutional buyer seeking 1mlbs of U3O8 is ready to start buying. The order is expected to be filled in small increments over the next several weeks or even months.

TradeTech’s spot price indicator finished the week down US10c from the previous week, at US$35.65/lb.

There was no activity in the term markets, although new demand emerged in the form of a US utility seeking material over a three-year period. TradeTech’s term price indicators remain unchanged at US$38.50/lb (mid) and US$50.00/lb (long).
 

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