By Greg Peel

If Germany hasn’t got enough on its hands at the moment, last week saw two German and one Swedish operator of nuclear power plants in Germany approach the country’s Constitutional Court to challenge the government’s decision to phase out nuclear power. The decision was made five years ago following the Fukushima disaster and represents an expropriation of their assets, the power companies allege.

The power companies have already filed damages claims in lower regional courts to the tune of a net US$16bn.

The courts were also called into action last week in Japan following a temporary injunction placed on Kansai Electric’s intended restart of two of its Takahama reactors. Kansai Electric has filed an objection, but is not yet able to restart the reactors as planned.

On the other side of the coin, South Africa is expected to post request for proposals at the end of the month for the construction of 9,600MW of nuclear capacity and Turkey is expected to initiate a tender process for the construction of its third nuclear reactor next year.

Back in the immediate world, the plunge in the spot uranium price witnessed these past few weeks has finally drawn out some buying interest, industry consultant TradeTech reports. Utilities emerged in both the spot and term markets. The buying was hardly frenetic, nevertheless, and resulted in only four spot market transactions totalling 900,000lbs U3O8 equivalent.

The good news is these transactions were conducted at higher prices as the week wore on, such that TradeTech’s spot price indicator has risen US85c from the week before to US$29.60/lb.

Interest continues to build in term markets for delivery contracts in both U3O8 and UF6 but still it appears utilities are in no rush to secure deals. TradeTech’s term price indicators remain unchanged at US$33.90/lb (mid) and US$44.00/lb (long).

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By Greg Peel

Last week Japan’s Otsu District Court ruled against the restart of Kansai Electric’s Takahama units 3 and 4, creating renewed uncertainty around the timing of reactor restarts in the country. Prime Minister Abe’s frustration was clear:

“Our resource-poor country cannot do without nuclear power to secure the stability of energy supply while considering what makes economic sense and the issue of climate change.”

To date, only two of Japan’s reactors have been restarted.

Since the Japanese tsunami hit five years ago last week, the spot uranium price has since fallen 58%. Hopes for renewed buying interest from utilities in 2016 is looking increasing misplaced. A total of 700,000lbs U3O8 equivalanet changed hands in five transactions last week, industry consultant TradeTech reports, at ever decreasing prices as the week progressed.

TradeTech’s weekly spot price indicator has fallen US$2.35 to US$28.75/lb – the lowest level since August 2014. The spot uranium price has fallen 16% in 2016 to date alone. Low prices did spark up some utility buying interest later in the week, but sellers were not prepared to capitulate even further. Transaction volumes in 2016 to date are 50% below those of the same period last year.

Two transactions were reported in the uranium term markets last week – one small, and one for 4mlbs U3O8 to be delivered over 2020-29. Tenders for the supply of in excess of 20mlbs over three different delivery contracts are yet to be settled, as has been the ongoing case for weeks now.

TradeTech’s term price indicators remain unchanged at US$33.90/lb (mid) and US$44.00/lb (long).

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By Greg Peel

Term uranium delivery contracts representing a net volume in excess of 20mlbs U3O8 equivalent are still out to tender with as yet no sign of settlement. Uranium sellers remain confident utilities are soon to re-establish buying interest, particularly at the longer end of the delivery market, but as each week goes by little eventuates.

Sellers have been expecting such interest to emerge since late last year. Meanwhile, volumes in the uranium spot market year to date are down 40% on last year to 5.6mlbs, industry consultant TradeTech reports. Transaction volumes are down 36% to 38. TradeTech’s weekly spot price indicator has spent the year drifting lower on lack of buying interest.

Last week saw 500,000lbs of U3O8 equivalent change hands in five spot transactions. There was utility interest on the buy-side, but not enough to prevent TradeTech’s spot price indicator falling another US$1.05 to US$31.10/lb.

Meanwhile, only 2.2mlbs changed hands in the term markets over the month of February. Trade Tech’s mid-term price indicator has fallen US$2.60 to US$33.90/lb. The consultant’s long-term indicator remains unchanged at US$44.00/lb.

There were no transactions in term markets last week.

The good news from last week, if there is any, is that the Indian government will allocate a further US$442m of its budget towards an effort to boost nuclear power generation projects over the next 15-20 years. India currently has 21 plants in operation and six under construction, with plans now in place for new reactors to be built in the Bihar, Haryana and Punjab provinces, which currently have no nuclear power capacity.
 

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By Greg Peel

The're hardly coming thick and fast, but Japan did restart its fourth nuclear reactor last week. Not that long-awaited Japanese restarts are evoking any excitement in the uranium market.

The week before last saw no transactions at all completed in the uranium spot market. There was only one small transaction completed in the term markets. But for some time there have been two term market delivery tenders sitting in the market, awaiting settlement, for a total of almost 20mlbs U3O8 equivalent.

Another tender for 2.7mlbs has now hit the term markets, and further tenders are expected soon for delivery of UF6, industry consultant TradeTech reports. Given no urgent demand in the shorter term, it appears prospective buyers are waiting to gauge pricing once these outstanding contracts are finally settled.

The sellers have become more anxious. With the end of the month approaching, early last week they began lowering offers in the spot market in an attempt weed out any interest. By week’s end a smattering of buyers was finally prompted into action, including utilities and traders. Six transactions were completed, TradeTech reports, but only for a modest total of 550,000lbs U3O8 equivalent.

TradeTech’s weekly spot price indicator has plunged by US$1.35 to US$32.15/lb.

With the aforementioned term market contracts still awaiting settlement, TradeTech’s term price indicators remain unchanged on US$36.50/lb (mid) and US$44.00/lb (long).

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By Greg Peel

South Australia’s Nuclear Fuel Cycle Royal Commission issued tentative findings last week, suggesting the high cost of nuclear power plant construction, flat demand for grid-based power and the increasing use of renewable power sources mean nuclear is uneconomical for the state “for the foreseeable future”.

It is somewhat ironic that South Australia hosts three of the only four operating uranium mines, by federal government sanction, in the country, including BHP Billiton’s Olympic Dam – the largest known uranium deposit and the second largest operating mine in the world. The NFCRC suggests uranium mining in the state could be expanded further, nevertheless, and that the storage of spent nuclear fuel from abroad could provide a substantial economic benefit.

It is all well and good that the Commission should support further expansion of uranium mining in the state. Australia’s fifth once-operating mine – Honeymoon, also in South Australia -- has been put on care & maintenance, while BHP’s expansion plans for Olympic Dam have been suspended for now and the company’s workforce at the site substantially reduced, with more reductions expected to follow.

While Japan continues its slow process of restarting existing reactors, China presses on with accelerated reactor construction and both China and Russia engage in reactor construction for foreign clients (India being perhaps the most notable), elsewhere activity is not so buoyant. The South Australian Commission cited high costs and low demand in advising against reactor construction, and the same conclusion has been arrived at by the Tennessee Valley Authority in the US.

The TVA has abandoned plans to build the first new generation reactors in Alabama, due to the high cost of construction and shrinking power demand.

Meanwhile, low electricity prices have driven the decision to switch off Sweden’s oldest reactor in 2017.

Perhaps this balance of nuclear power demand across the globe is best evidenced in activity in the global spot uranium last week. There wasn’t any. Sellers tried to spark some interest by lowering offer prices, industry consultant TradeTech reports, but didn’t get a bite. TradeTech’s weekly spot price indicator has been lowered by US50c to US$33.50/lb.

One small transaction was completed in the mid-term market last week. TradeTech notes the two big outstanding term market tenders, totalling almost 20mlbs of U3O8 equivalent for delivery over mid to long term periods, have yet to be settled. This likely explains why the market has ground to a halt. Pricing on these orders will no doubt set the tone for spot and term market trading ahead.

In the interim, TradeTech’s term price indicators remain unchanged at US$36.50/lb (mid) and US$44.00/lb (long).
 

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By Greg Peel

For months now, sellers of uranium have been counting on a resurgence of demand in the mid-term delivery contract market given a long period of limited buying interest. While term demand has stepped up a little, utilities remain fairly well stocked and appear in no rush to pay up for material, particularly in the spot market.

Thus last week when a little more spot buying interest hit the market, sellers were quick to offload material. Spot volume increased to 1mlbs U3O8 equivalent in five transactions from 650,000lbs the week before, industry consultant TradeTech reports, but prices drifted lower as the week progressed.

TradeTech’s spot price indicator ended the week down US15c at US$34.00/lb.

Interest in the term market remains evident but not rushed. Two transactions were reported in the term markets last week but only to the tune of around 1mlbs. Meanwhile, two utilities are continuing to evaluate offers for delivery of almost 20mlbs in total across mid and longer term timeframes.

As to whether the settlement of these offers can prove market-moving is yet to be seen. Meanwhile, TradeTech’s term market price indicators remain unchanged at US$36.50/lb (mid) and US$44.00/lb (long).

There had been much anticipation, going back a couple of years now, that once Japan commenced restarting its idled reactors the spot uranium price would begin a resurgence. But given Japanese utilities did not rush to dump their stockpiles in the interim, no significant demand driver has emerged. A fourth Japanese reactor is set to restart at the end of this month, but there has been no resultant excitement in the market.
 

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By Greg Peel

In a relatively slow start to the new year, the month of January saw 2.9mlbs of U3O8 equivalent change hands in 17 transactions, industry consultant TradeTech reports, up from 2.2mlbs in December. An expected resurgence in end-user demand failed to materialise outside two utilities purchasing a total of 1.5mlbs.

Sellers remain confident demand will grow in 2016 and as such are in no real hurry to drop offer prices, but TradeTech reports that demand may not appear in earnest until later in the year. Some sellers were keen to offload material in January nonetheless, thus eroding an early rally in the spot price. By month-end, TradeTech’s weekly spot price indicator closed up US45c on end-December, at US$34.65/lb.

Demand is more skewed towards mid-term delivery than spot, and three transactions were concluded in the mid-term market in January, totalling 2.7mlbs. TradeTech lifted its month-end mid-term price indicator by US50c to US$36.50/lb.

The sellers became a little more anxious last week, TradeTech notes. Five spot transactions totalling 650,000lbs U3O8 equivalent were concluded, up from four transactions last week. TradeTech’s weekly spot price indicator has fallen US40c to US$34.15/lb.

One transaction totalling a mere 200,000lbs was reported in the mid-term market last week but there are two outstanding tenders for sizeable longer term volumes awaiting conclusion. TradeTech’s term price indicators remain unchanged at US$36.50/lb (mid) and US$44.00/lb (long).

In industry news, Japan marked the restart of a third reactor late in January. While three reactors is a far cry from Japan’s pre-Fukushima nuclear capacity, the country has now begun to lower the volume of LNG it has been forced to import as a replacement for lost power generation. LNG imports dropped 3.9% in 2015 from 2014 and the trend is expected to continue.

US power company Southern Co once suggested LNG was the obvious “dominant solution” for power generation as the industry transitions away from coal, but the company is also now considering nuclear power as part of its longer term baseload plans.

Meanwhile, cash-strapped Russia, suffering from the collapse in oil and gas prices, is looking to expand its domestic uranium production industry through tax incentives and the removal of red tape. Russia is building reactors for several countries across the globe but the government is also looking to diversify its commodity production base, it would seem.

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By Greg Peel

2015 featured the first post-Fukushima restarts of Japanese reactors as initially Kyushu Electric’s Sendai 1 came on line, followed by Sendai 2. Last week saw Kansai Electric’s Takahama 3 become the third reactor to be restarted, with Takahama 4 due to fire up this month.

Not only did the 2011 Fukushima disaster shut down Japan’s nuclear capacity, it led to more stringent safety requirements in the world’s fastest growing adopter of nuclear energy – China.  This slowed the process of reactor approval but this week the Chinese government suggested an earlier target of 58GW of nuclear capacity by 2020 can still be achieved. China currently has 30 operating reactors and 24 under construction.

In other demand-side news last week, Electricite de France announced it has signed an agreement to take over long delayed construction of six reactors in western India, which could become the world’s biggest nuclear contract. This goes some way to alleviating EDF’s disappointment in having to delay final approval for construction of the Hinkley Point reactor in the UK.

All up, the global demand side for uranium looks very healthy, but it’s all about the medium to longer term. In the short term, utilities remain well supplied. Activity in the spot market was particularly slow last week, industry consultant TradeTech reports, featuring only four transactions totalling 500,000lbs U3O8 equivalent.

The majority of any buying interest remains limited to traders and speculators. TradeTech’s weekly spot price indicator has fallen US10c to US$34.65/lb.

One transaction was reported in term markets last week, but only for 500,000lbs mid-term. Meanwhile, two utilities have tenders out for mid and longer term delivery of 10.5mlbs and 9.4mlbs respectively, TradeTech reports.

TradeTech’s term price indicators remain unchanged at US$36.00/lb (mid) and US$44.00/lb (long).

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By Greg Peel

As we move into 2016 we note that 2015 was a year in which the spot uranium price proved a rampant outperformer. The price has hardly moved much in the past few months, thus uranium has left other commodities such as oil, iron ore and copper in its dust.

This point was not lost on attendees at this year’s Nuclear Fuel Supply Forum held in Washington last week. Hence the mood at the gathering was a bit more upbeat than at previous Forums, industry consultant TradeTech noted.

Uranium had its big price fall in 2011 and despite a couple of blips in between, has been stuck around the low end of the post-Fukushima range for quite some time. The pace of Japanese reactor restarts has been glacial, and most utilities spent 2015 well supplied with stockpiles. Thus demand has been tepid, balanced by forced supply curtailments among producers as uranium prices lingered below the cost of production for many mines.

A demand-supply balance of sorts thus ensured a lack of price volatility in late 2015. But 2016 sees utilities start with a new budget and already interest is quietly building, TradeTech reports. The commodity is also attracting more interest from the speculative side of the market, given its lack of price collapse alongside just about everything else.

On the supply side, we note that Australian-listed Paladin Energy ((PDN)) increased both its production (16%) and its revenue (75%) in the December quarter despite muted prices. Paladin has had to refinance but cost-cutting has clearly provided benefits, alongside a low but, importantly, stable price of late.

The fact the uranium price should not be impacted by a significant fall in oil prices is interesting, given nuclear energy is an alternative to fossil fuels. Economically it would be difficult to justify the very long lead time and high cost of establishing a nuclear power station when the alternatives of coal, oil and gas are historically so cheap. But the global push to build nuclear capacity, particularly in emerging markets, rages on. It is not an economic consideration, it is an environmental one.

With most of the uranium market attending the Forum in Washington last week, uranium market activity was understandably subdued. TradeTech reports five transactions totalling 700,000lbs U3O8 equivalent were concluded in the spot market last week, but there is no change to the consultant’s weekly spot price indicator, which remains at US$34.75/lb.

Utilities are evaluating delivery contract offers in the term markets but TradeTech’s term price indicators remained unchanged last week at US$36.00/lb (mid) and US$44.00/lb (long).

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By Rudi Filapek-Vandyck

With most utilities having already satisfied their short term procurement requirements by the close of November, global trading in uranium fell into a funk in December. TradeTech's spot price indicator fell by no less than seven percent during the week ending December 18; down US$2.50 to US$33.50/lb as buyers started clearing their desk but sellers tried desperately to offload some more produce before the end of calendar year festivities and holidays.

On the industry consultant's insights, most utilities won't be returning until after January. On top of this, the focus of the majority of market participants is on meetings of the World Nuclear Association in London and the Nuclear Energy Institute in Washington, DC.

Since that week of desperation in mid-December, spot uranium prices have steadily added small gains each week. Last week, up to Friday 15th January saw US$0.25 being added to take the price back to US$34.75/lb. This remains short of the spot price prior to mid-December, but at least uranium has escaped the global sell-off that has gripped risk assets, and commodities in particular, throughout the two opening weeks of calendar 2016.

Moreover, TradeTech reports countries scaling back on their coal usage are increasingly signalling that uranium is likely to be one of the beneficiaries. Apart from China, both Nigeria and Kenya are contemplating plans for the inclusion of nuclear in the local energy mix.

On TradeTech's observation, January's buying interest stems from a combination of traders taking positions as well as the emergence of new demand from non-US utilities. Offers were due last week to a non-US utility seeking 780,000 pounds U3O8 for spot delivery. One non-US utility awaits offers for 850,000 pounds U3O8 equivalent contained in UF6.

The week saw four transactions being concluded, involving just over 1.1 million pounds U3O8 for delivery in 2016. Traders and intermediaries concluded the purchases, reports Tradetech, with producers and intermediaries acting as sellers.

TradeTech's mid-term price indicator fell to US$36/lb in December and has not recovered as yet. The long term price indicator remains at US$44/lb.

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