By Andrew Nelson

The low volume drop in uranium prices booked the week before last drew out some new buyers last week. There were six deals transacted and 800,000 pounds of uranium subsequently changed hands.

Industry consultant TradeTech reports that utilities and producers were the buyers for the most part. Traders, financial entities, and producers were the sellers. For most of the week the market was quiet, with buyers coming out as the week drew to a close, attracted by slipping prices.

US$40/lb was tested, but not broken and while TradeTech says that there were a number of discretionary buyers hanging around for sub US$40 prices, their hopes were in vain, it turned out. The low cost sellers had already been drawn out and the rest were simply unwilling to budge any further.

When the dust had settled, TradeTech’s Weekly U3O8 Spot Price Indicator was at US$40.25 per pound, down US$0.65 from the prior week’s value.

Unlike the spot market, the term uranium market was once again a quiet place last week, with no new transactions or demand reported. There were a few utilities around that are still thinking about jumping in, but that’s all.

TradeTech’s Mid-Term U3O8Price Indicator stayed put at US$46.00/lb, while the Long-Term U3O8Price Indicator held firm at US$57.00/lb.

Despite the continued weakness in the uranium price, there was a little bit of incremental good news that supports the expectation for building demand. Poland’s largest utility is looking for investors and technology partners for help in building the country’s first nuclear plant.

There were also a few rays of sunshine from Japan, with courts rejecting a petition to shut down the country’s only two operating commercial reactors. Anti-nuclear activists were trying to have the units shut down, claiming they sit over a fault line. The court thought not.

While two reactors kicking on with business is s a slight positive, the fact remains that some 50 reactors in Japan remain idled post the March 2011 Fukushima accident. The next bits of regulatory news are not gleefully awaited, with Japan’s Nuclear Regulatory Agency expected to release new nuclear safety guidelines in July.

Paladin Energy ((PDN)) reported production last week, with output from its two uranium mines in Africa adding up to nearly 2 million pounds, or 95% of nameplate production capacity. Production for the first nine months was at 6.1 million pounds, 26% higher than last year’s first nine months.
 

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By Andrew Nelson

Most of the uranium world gathered for the World Nuclear Fuel Cycle conference last week in Singapore. While many were hoping this could be the event that would bring back some reason and ignite an increase in demand, the exact opposite is what ended up happening.

We’ve been looking at flat week on week pricing for a while now, but a couple of sellers entered the market with a little new supply at the wrong time and the next thing you know TradeTech’s U308 Spot Price Indicator is down US$1.35 to US$40.90 per pound. The move is on the back of just two deals that accounted for 200,000 pounds of uranium changing hands.

TradeTech speculates it was the lack of market activity and talk of new problems with Chinese import licenses that prompted a couple of sellers to lower their prices. That leaves a fairly big question: why hasn’t this big drop in the price drawn out more buyers?

There was a bit of news out of Japan last week that certainly didn’t help matters. JP Morgan reported the country had finally released the much touted new safety standards for nuclear power. “Stringent” is the adjective used by the broker to describe the new codes.

JP Morgan sees the new rules easily delaying the restart of reactors in the country. According to the broker’s strategy team, it’s possible that only 2-3 reactors will restart this autumn, which would only offset the closure of the Ohi plant in September. In fewer words: JP Morgan says depressed uranium demand could last longer than expected.

Business intelligence house GlobalData has put out a new report that predicts to a 30% increase in global nuclear energy generation by 2020. The numbers are in the same neighbourhood as what we’ve been hearing for a while now and the report cites an escalating need for power and ever increasing fossil fuel prices as driving the demand, especially amongst rapidly developing countries.

The Sydney Morning Herald reported last week that Energy Resources of Australia ((ERA)) said that an approval to construct an underground uranium mine at its Ranger mine in Kakadu National Park is expected and will help re-establish the company as one of the market’s major players.

“ERA expects to commence underground exploration drilling of the Ranger 3 Deeps exploration decline in the second quarter of 2013,” said the news report.

Yet while many may hope for higher prices, there is still very little to pin those hopes on other than the abstract truth that demand must increase over the years ahead, while supply is too short and decreasing. This fact is easily borne out by the state of the term uranium market, which was flat and transaction less once again last week.

There was no new demand at all, although one lonely utility did pick a lucky preferred supplier for mid-term deliveries. But in the end, TradeTech’s Mid-Term U308 Price Indicator remained at US$46.00/lb, while the Long-Term Price Indicator stayed put at US$57.00/lb.
 

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By Andrew Nelson

Last week was a quiet and uneventful week as far as the uranium market goes. Industry consultant TradeTech reports just three deals were done and accounted for only 400,000 pound of uranium changing hands.

As one can tell by last week’s numbers, the spot market is near dead at the moment and what little demand there is, is either speculative or long-dated. The good news here is in the resolve of sellers. Over the past couple of years, a month of flat prices would have lead to some sort of inflexion point, normally followed by another leg down in the spot price.

Yet this time around it seems that sellers are holding firm, unwilling to drop prices to get the deal flow going again. TradeTech sees a little seller support arising from the upcoming World Nuclear Fuel Cycle conference, which kicks off in Singapore this week. Fingers crossed, but the right sort of news could well lead to a pickup in demand. The problem is what a bad news could lead to.

In the lead up, the uranium market is dead, with market activity stalled out and prices remaining flat. On Friday, TradeTech’s Weekly U308 Spot Price Indicator was still US$42.25 per pound, the same as the Friday prior and the one before that as well.

The term uranium market was even deader, with no deals reported at all once again. TradeTech does note that there are several utilities getting ready to join the term market in coming weeks. TradeTech’s Mid-Term U3O8 Price Indicator was unchanged at US$46.00/lb, while the Long-Term Price Indicator remained at US$57.00/lb.

There is a bit of minor, speculative demand out there for longer term deliveries, it’s just not feeding through to sales. One non-US utility is looking at offers for around 2 million pounds for delivery between 2014 and 2020. Another non-US utility is looking for 1 million pounds over five years, while a third one is out for 750,000 pounds from 2014 -2018. An actual US utility is evaluating offers for about 1.2 million pounds, while another wants an undisclosed amount beginning in 2017.
 

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By Andrew Nelson

March was a mild and somewhat positive month for uranium, with producers hoping TS Elliot is wrong in his claim that April is the cruellest month.

It was a slow month, activity wise, with the 19 deals in March a bit less than the 21 transactions booked in the month prior, while volumes of 2.6 million pounds of uranium fell well short of the 3.2 million pounds of U308 equivalent changing hands in February.

Industry consultant TradeTech notes that year to date volume is at 10.5m pounds, well up from the 3.6m pounds reported in the first quarter of 2012.

The market simmered down quite a bit after the uncertainty and price volatility seen at the end of February after it was rumoured that Japanese utilities were considering selling down stockpiles. By the end of March, TradeTech's Exchange Value was up US$0.25 to US$42.25/lb.

Activity in the term uranium market was even slower, with only one transaction reported for deliveries beyond 2015. Although, TradeTech does report there are a number of utilities expected to enter the term market in coming weeks.

Until then, prices will stay exactly where they are and where they have been over the course of the month. TradeTech's Mid -Term U308 Price Indicator is at US$46.00/lb and the Long-Term Price Indicator is unchanged from last month's value of US$57.00/lb.

The last week of the month was especially light on given the interruption of the Easter holiday and spring break in the US. Just three transactions were reported last week accounting for 400,000 pounds. The spot uranium price remained unchanged, making for three flat weeks in a row.

TradeTech notes that demand remains highly discretionary. There are several buyers poised to enter the market, although sellers themselves aren’t really chasing sales and continue to shown little willingness to drop prices for the moment.

And as can be gathered from the above commentary on term markets, there were no transactions reported last week. There is one non-US utility looking for around 2 million pounds for delivery between 2014 and 2020, but that’s about all that’s kicking around at present expect for a few more utilities that may be looking at purchases totalling about 8 million pounds for delivery between 2015 and 2025.
 

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By Andrew Nelson

It’s almost two years now since the Fukushima nuclear disaster and Japan still hasn’t restarted its nuclear power capacity. And what’s more, it probably won’t  happen this year because of the country’s push for new safety measures. Prime Minister Shinzo Abe told the Japanese parliament as much last week, saying safety approval on the new guidelines will be the first step and it won’t be bypassed.

With Japan still well and truly on the sidelines, the rest of the world is left to pick up the slack. A recent International Atomic Energy Agency (IAEA) report has called 2012 the year of return to growth as far as global nuclear power generation capacity goes. The report shows that 437 nuclear power reactors were now operating. This is two more than in 2011.  Total electricity generation from nuclear power rose 3.7 gigawatts to 372.5 gigawatts, compared to a drop of seven gigawatts in 2011. It’s not much, but it’s something.

Construction work has also kicked off on seven new reactors, four of them in China and one in South Korea, one in Russia and another in the United Arab Emirates, according to the IAEA's Nuclear Technology Review.

The IAEA also noted that a number of countries are planning to extend the lifetime of nuclear plants, with growing interest also increasing in small and medium-sized reactors, which are cheaper to build. Overall, the IAEA sees growth of anywhere between 23% to 100% in nuclear power capacity by 2030.

Activity in the spot uranium market was steady, if not exciting last week. There were seven deals that saw some 800,000 pounds of uranium change hands. That’s three more deals than last week, although 100,000 pounds less stock changed owners.

Buyers and sellers alike had been sent scattering a month back on news Japanese utilities were looking to sell down stock. It is now starting to look like the report may have been off the mark and buyers are cautiously starting to re-connect with the market. Industry consultant TradeTech reports the buying is still pretty much discretionary and is thus highly price sensitive.

TradeTech’s Weekly U308 Spot Price Indicator is now at US$42.25 per pound, which is up $0.25 from last week’s price.

There was one deal concluded in the term market, although there was no new demand to fill the gap. Still, TradeTech does note there are several utilities expected to enter the term market in coming weeks. In the meantime, there is no change to TradeTech’s Mid-Term and Long-Term U3O8 Price Indicators, which stay put at US$46.00/lb and US$57.00/lb. 
 

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By Andrew Nelson

February might not have been a busy month as far as uranium volumes go, but it sure was an eventful month. The market saw some on and off levels of pronounced volatility, mostly driven by talk of possible production cutbacks earlier in the month, which was more than offset by reports later in the month of Japanese utilities selling off stock.

Industry consultant TradeTech reports there were twenty-one transactions adding up to around 3.2m pounds of U308 changing hands over the course of the month. Traders and producers were again the main drivers of spot market activity.

The big news came out on the 20^th. That’s when The Japan Times reported that not one, but two Japanese utilities were looking at taking the unheard of step of selling down uranium inventory. It was reported that Japan Atomic Power Company (JAPC) had already sold some inventory to a supplier in order to raise cash to pay back loans, while Tokyo Electric Power Company was said to be considering the same move.

That’s exactly when spot prices started to head south and as a result, trading activity slowed as we neared the end of the month. By the 28^th of February, TradeTech's Exchange Value had pulled back US$1.75 to US$42.00 per pound.

There was much more than the usual amount of activity in the term market, with seven transactions accounting for over 2 million pounds of uranium for delivery between 2014 and 2017. The activity wasn’t great news for sellers either, with TradeTech's Mid-Term U308 Price Indicator for February down US$3.00 to US$46.00 per pound over the course of the month. The Long-Term Price Indicator stayed put at US $57.00 per pound.

There is still plenty of activity out there. Offers are due this month to a non-US utility seeking approximately 2 million pounds for delivery between 2014 and 2020. TradeTech also reports a number of other utilities are still looking at potential purchases totalling about 8 million pounds.

Things started to improve a bit in the market last week, with the big drop in spot prices towards the end of February drawing out some more buyers. Still, transactions were thin, with only four reported with just 900,000 pounds changing hands. The problem is that most buying interest remains discretionary, with current spot supply more than enough to meet existing demand.

Trade Tech reports that last week’s buyers included utilities, as well as the more usual intermediaries, and producers. There was a bit of good news in that two non-US utilities have entered the market looking for more than 400,000 pounds for spot delivery. 

Still, the low volumes and few sales meant TradeTech’s Weekly U308 Spot Price Indicator stayed put at US$42.00 per pound, while no action in the term market meant the Mid-Term and Long-Term Price Indicators were also unchanged at US$46.00 and US $57.00 per pound respectively. TradeTech does expect several utilities to enter the term market in coming weeks.
 

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By Mike Kapsch, Investment U Research
Thursday, February 14, 2013

It’s no secret uranium prices have plummeted since the Great Recession and Japan’s Fukushima disaster. In 2007, a pound of U3O8 was worth as much as US$136. Today, the same amount sells for just US$43.88.

Yet, of all the places you could invest this year, I’d say one of the best will be the nuclear industry… Especially in miners that export uranium to China. Why?

The reason is two-fold. Despite all the controversy surrounding it, global demand for yellowcake and nuclear energy is actually higher today than it was before Japan’s nuclear meltdown in 2011. And when it comes to China, there’s simply no other country like it, expanding as much, or as quickly, into nuclear energy.

China’s Yellowcake Motive

Within the next 10 to 15 years, China is set to surpass the United States as the largest uranium-consuming nation in the world.

As Mining.com reports, “As of November 2012, China had 15 operating reactors (11.9 GWe of installed capacity), and 26 reactors were under construction (27.6 GWe), that amounts to about 42% of reactors under construction worldwide. Additionally, 51 reactors were planned (57.5 GWe) with its building due to start within three years, and many more than 100 units are proposed, which are likely to be commissioned before 2030.”

As you can see from the chart, the United States currently has just over 100 operating nuclear reactors. Before 2030, China plans to more than double that figure. If we assume the average nuclear reactor costs around US$4 billion to construct, and that China will follow through constructing its proposed reactors, this energy build-out could be upwards of US$708 billion. It’s a massive undertaking, the likes of which have never occurred before in the nuclear industry. But the reason it’s happening isn’t all good.

China is the most polluted country in the world. In Beijing, air pollution is so bad it hit hazardous levels 20 days in January. Other reports state you can actually see the pollution from outer space. Things are so bad, in fact, residents in Beijing right now can receive US$19,000 in government subsidies when they purchase an electric vehicle.

Considering China uses nearly as much coal each year as the rest of the world combined, it makes sense that air pollution there is becoming its greatest health threat. Inevitably, China isn’t investing in nuclear energy because it wants to, but because it has to. It may not be great news for the nation. But for investors, this scenario creates a number of opportunities to potentially make money as China works to reduce its pollution levels.

A Blend of Risk and Reward

There are two reasons I especially like uranium miners who export to China.

First, China’s uranium imports are steadily increasing. In 2010 alone, they more than tripled. By 2020, the World Nuclear Association predicts that number will increase another 15%. Around 95% of China’s uranium imports are from Kazakhstan, Namibia, Australia and Uzbekistan. But starting next year, even Canada is preparing to export uranium to China for the first time ever.

Second, unlike other commodities, like rare earth metals, China does not have a monopoly over the uranium market. Around the globe, the biggest reserves by country are in Kazakhstan, Canada and Australia.

Third, Canadian and Australian miners, such as Cameco (NYSE: CCJ) and BHP Billiton ((BHP)), are free to operate how and where they please. They aren’t subject to the same restrictions uranium miners in China are bound to. Namely, they’re not tools of the government. They’re diversified, experienced companies that operate all over the world.

Only time will tell if 2013 will be a banner year for uranium prices and miners. But things are heading in the right direction. Shares of CCJ and BHP are up 18% and 8% in the last three months alone. Not to mention, the spot price of uranium is up over US$2 since October 2012. There are likely plenty more gains up ahead. And right now is an opportune time to get ready for the ride.

Good investing,

Mike

Reprinted with permission of the publisher. The above story can be read on the website www.investmentU.com. The direct link is: http://www.investmentu.com/2013/February/uranium-chinas-nuclear-energy-build-out.html

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