By Greg Peel

For three weeks in a row, industry consultant TradeTech’s weekly spot price indicator stalled at US$36.25/lb as buying interest failed to materialise. Sellers were hoping news that the first two Japanese reactors will be up and running shortly, and that India is stepping up its nuclear power capacity, would encourage buyers so they refused to lower prices.

Until last week. Uranium suppliers are facing near-term financial pressures at low spot prices and global supply remains in excess, thus last week saw the sellers finally capitulate out of necessity and subsequently TradeTech’s weekly spot price indicator plunged US$1.25 to US$35.00/lb.

The end of the week also saw the end of the month, and for the month of July TradeTech registered 19 transactions totalling, 2.3mlbs of U3O8 equivalent – a fifteen-month low.

There were five transactions reported in the term market throughout the month, totalling 15mlbs of U3O8 equivalent, but the bulk of that volume represents one particular delivery deal, being a commitment from Kazakhstan to deliver 5000t to India over a five-year period. There is nevertheless a lot more buying interest in the wings of the mid-term market at present than there is in the spot market, TradeTech notes.

Excess supply and access to low-cost financing is allowing some suppliers to offer low mid-term delivery prices and competition is intense, with both producers and intermediaries fighting for market share. As a result, TradeTech has also lowered its mid-term market price indicator by US$1.25 to US$38.25/lb.

TradeTech’s long-term price indicator falls US$1.00 to US$45.00/lb.

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By Greg Peel

Activity on the uranium spot market has come to a complete standstill. Industry consultant TradeTech reports one seller did capitulate towards the end of last week and lowered its price in order to entice some buying interest, but could not cement a deal.

In all, only three transactions were reported in the spot market last week, totalling a mere 350,000lbs of U3O8 equivalent. TradeTech’s weekly spot price indicator remains unchanged for the third week running at US$36.25/lb.

While such a price is not about to spark excitement among uranium producers, at least they might take solace in the fact most other commodities have suffered falling prices of late while uranium has gone nowhere.

There were no transactions reported in the uranium term markets last week either. TradeTech’s term price indicators also remain unchanged at US$39.50/lb (mid) and US$46.00/lb (long).

On the positive side, news from India should have provided some comfort for sombre uranium producers.

India continues to move forward with plans to build additional nuclear reactors. Projects currently commissioned or under construction are expected to take the country’s nuclear power capacity to 10,800MW by 2018-19. The government will provide financing for two further projects to begin this year, adding another 3,400MW, and another two-unit project is expected to be initiated in the near future.

As India’s nuclear capacity builds, the government has also decided it would be prudent for the country to create a strategic uranium reserve in order to head off any shortage of fuel. At this stage the government believes a pool of between 13m and 39mlbs of U3O8 should provide enough to keep the country’s reactors going for five to ten years.

But while India ramps up its nuclear power, France is ramping down.

The French parliament has now adopted an energy law that will see nuclear power providing 50% of France’s power capacity by 2025, down from a current 75%. The legislation also calls for a 30% drop in the use of fossil fuels, from 2012 levels, and a 40% drop in carbon emissions, from 1990 levels, by 2030.
 

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By Greg Peel

Shikoku Electric’s Ikata unit three last week became the fifth Japanese reactor at the third plant to obtain regulatory approval for restart. While regulatory approval is a big step, Shikoku must still complete a number of additional measures and obtain local consent before restarting the unit. The company hopes to be up and running by the northern winter.

At this stage, Kyushu Power’s Sendai units remain on track to be the first reactors to be restarted since 2011, with next month still the goal.

The news from Japan was one small highlight in what was otherwise a very quiet week in uranium markets. Activity in the spot market remains exceptionally slow, industry consultant TradeTech reports, with buyers mostly more interested in acquiring material for delivery later in the year or next year, and sellers holding off until the quiet northern summer season comes to an end.

TradeTech reports five transactions in the spot market last week totalling 500,000lbs of U3O8 equivalent. The consultant’s weekly price indicator remains unchanged for the second week running, at US$36.25/lb.

Two transactions were reported in the term market last week, totalling 1mlbs of U3O8 equivalent. TradeTech’s term price indicators remain unchanged at US$39.50/lb (mid) and US$46.00/lb (long).

Things are looking a bit brighter for Australian uranium producer Paladin Energy ((PDN)). Having struggled for some time with debt issues in a low uranium price environment, the company posted a 340% revenue increase in the June quarter from the March quarter, selling 1mlbs of U3O8 at an average US$41.50/lb. Production at Paladin’s flagship Langer Heinrich mine in Namibia increased by 8% over the quarter.

Meanwhile in the wake of Energy Resources of Australia’s ((ERA)) decision to mothball its Ranger Deeps 3 project in the Northern Territory, the traditional owners of the land have challenged the federal government to guarantee that no further uranium mining will ever occur on ERA’s Ranger and Jabiluka leases, and to prepare the sites for inclusion into the Kakadu National Park.

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By Greg Peel

The volatility seen in the spot uranium market in 2014 has largely subsided in 2015, industry consultant TradeTech notes, leading to increased liquidity. Spot sales are up 69% from a year ago in volumes terms and 40% in dollar terms. At the end of the March quarter, spot prices were up 20% from the year before and term prices were relatively stable.

The spot market was stable last week, TradeTech reports, which saw five transactions completed totalling 800,000lbs of U3O8 equivalent. Demand for spot volumes remains relatively slow but with mid-term demand continuing to build, sellers are unwilling to reduce their prices. Little fluctuation was seen for spot prices over the week and TradeTech’s weekly spot price indicator remains unchanged at US$36.25/lb.

Two mid-term transactions were reported last week involving a total of 1mlbs of U3O8 equivalent, and various utilities are still evaluating supply contract offers. One long-term transaction was also completed last week. TradeTech’s term price indicators remain unchanged at US$39.50/lb (mid) and US$46.00/lb (long).

Last week brought news fuel loading will commence shortly at Kyushu Power Co’s Sendai units 1 and 2 ahead of expected restarts in August. TradeTech notes 43 Japanese reactors are potentially able to restart and 24 are currently in the process of restart approval.

In other news, India continues to secure supply agreements to fuel that country’s nuclear reactors. In April, India purchased 13mlbs of uranium from Canada’s Cameco and this week Kazakhstan announced it had signed a deal with India for the supply of 13mlbs over the next five years. Between 2010-14, Kazakhstan supplied India with 5.5mlbs.

Last year Uzbekistan agreed to supply India with 5.2mlbs over four years and news last week is that India is in further discussions with Uzbekistan on future supply deals as well as stronger cooperation on security and defence.

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By Greg Peel

Last month’s news that Energy Resources of Australia ((ERA)) would not be proceeding with its planned Ranger 3 Deeps underground uranium mine, and the growing emergence of utility demand for uranium at attractive prices, conspired to provide a boost to interest in the uranium market in June. At month’s end, industry consultant TradeTech’s spot price indicator had risen US$1.25 from end-May to US$36.25/lb, having traded as high as US$36.75/lb mid-month.

As at Friday, TradeTech’s weekly spot price indicator was unchanged at US$36.25/lb, down US25c from the week before.

June saw 24 spot market transactions for a total of 3.8mlbs of U3O8 equivalent, TradeTech reports, up almost 900,000lbs from May. Three utilities seeking 640,000lbs U3O8 for delivery later this year found suppliers, while another utility is currently looking for 54,000lbs for November delivery.

Six transactions totalling 3.6mlbs of U3O8 equivalent were reported in the term uranium markets last month. Lower prices in the mid-term market has encouraged utilities to enter on the buy-side, TradeTech notes, and a US utility appeared late in the month seeking 100,000-300,000lbs for delivery over 2018-25. A non-US utility is seeking around 9mlbs for 2017-26 delivery.

Sellers have become more aggressive in the mid-term market, the consultant reports, while not being as keen to deal in the long-term market, except at higher prices. TradeTech’s long term price indicator remains at US$46.00lb, but due to building demand, TradeTech has raised its mid-term price indicator by US50c to US$39.50/lb.
 

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By Greg Peel

Six transactions totalling 900,000lbs of U3O8 equivalent were traded in the uranium spot market last week, industry consultant TradeTech reports. Sellers were not keen to lower prices to meet buying interest earlier in the week thus when two utilities entered the market looking for a total of over 300,000lbs, buyers were encouraged into paying up.

TradeTech's weekly spot uranium price indicator nevertheless remains unchanged at US$36.50/lb. Near term spot market interest remains generally weak, the consultant suggests, given a preference for delivery from 2016 and beyond.

Three transactions totalling 1.2mlbs of U3O8 equivalent were concluded in the mid-term market last week, and new demand emerged from a utility seeking 100,000lbs per year over 2018-19 and 300,000lbs per year over 2020-25. Another utility is seeking a total of 9mlbs over 2017-26 and further utility interest is also emerging.

TradeTech's term price indicators remain unchanged at US$39.00/lb (mid) and US$46.00/lb (long).

Japanese utilities held shareholder meetings last week and a number of antinuclear proposals were pushed, but officials expressed their eagerness to restart nuclear power plants as soon as possible. Kyushu Electric's Sendai units 1 and 2 should begin the restart process in the next couple of weeks.

There are currently 43 operable reactors in Japan potentially able to restart, TradeTech notes, of which 24 are now in the process of seeking restart approval.

While Japanese utilities might be keen to fire up once more, German utilities are disgruntled that the opposite is true in their country. Germany's Grafenheinfeld reactor shut down last week as the process of phasing out nuclear energy by 2022 proceeds. It's a long timeframe, but already Germany's electricity supply is feeling the strain, as the construction of new power lines fails to keep pace with the shift in supply sources.

Australia's Paladin Energy ((PDN)) made history this week by being approved for majority ownership of the proposed Michelin mine in Canada. Canadian law stipulates Canadian uranium mines must be majority owned by Canadian companies or investors but the law does allow leeway when no Canadian partner puts its hand up.

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By Greg Peel

In the week before last, Energy Resources of Australia ((ERA)) announced it was deferring its Ranger 3 Deeps project in Australia’s Northern Territory, effectively removing a possible 77mlbs of future global supply for the time being. The announcement was influential in a US$1.25 jump for the spot uranium price.

But last week initial enthusiasm for the supply reduction waned, industry consultant TradeTech reports, and prices began to drift lower by week’s end. TradeTech’s weekly spot uranium price indicator has fallen US25c to US$36.50/lb.

Supply side aside, there were several announcements regarding the uranium demand side last week.

China has developed the third generation Hualong One nuclear reactor domestically and China’s premier Li Keqiang said last week his government plans to promote nuclear power both at home, where manufacturing processes are being upgraded, and abroad, where more global deals will be sought.

Russia’s state-owned Rosatom will begin mass-producing its own reactors to meet the growing demand for nuclear power around the globe. Rosatom is building a series of off the shelf reactors which will feature design options to suit varying climates, seismic risks and other parameters.

The US and South Korea have been negotiating a civilian nuclear cooperation agreement for some years and last week it appeared a deal had finally been reached. While South Korea will continue to be banned from reprocessing and enrichment it will be permitted to pursue research into the recycling of spent nuclear fuel rods.

In an otherwise quiet week in the uranium market, four transactions were completed in the spot market totalling 550,000lbs, TradeTech reports. A US utility looking to buy 500,000lbs of U3O8 equivalent for 2018-22 delivery has finalised its evaluation of offers. TradeTech’s term price indicators remain unchanged at US$39.00/lb (mid) and US$46.00/lb (long).
 

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By Greg Peel

Energy Resources of Australia ((ERA)) has announced its proposed Ranger 3 Deeps underground project in the Northern Territory will not proceed to the final feasibility study stage at the present time, given weakness in the current uranium operating environment. Uranium prices have not rebounded as ERA management was expecting.

A further impetus not to proceed is the 2021 expiry date of the company's Ranger Authority, permitting the company to mine the area. The economics of Ranger 3 require operations to proceed beyond this date, and an extension of the Authority would need to be negotiated with both the federal government and traditional landowners. ERA will continue to service existing sales contracts through the processing of Ranger stockpiles.

For stockbrokers, investment in ERA had become a largely binary proposition based on whether Ranger 3 would go ahead or not. The three FNArena database brokers left covering the stock now all rate ERA a Sell or equivalent, with their consensus target price having fallen to 72c from a prior $1.17. JP Morgan, in particular, has lowered its target to 30c.

Two-thirds shareholder of ERA, Rio Tinto ((RIO)), has approved the project deferral. Rio has flagged a write-down of the carrying value of its ERA stake by around US$300m.

The Ranger 3 Deeps mineralisation zone is estimated by ERA to contain some 77mlbs of U3O8. The project may be revisited in the future under different market circumstances, but for now the deferral represents 77mlbs of future supply that will not be hitting the market.

This news proved encouraging for uranium sellers last week, industry consultant TradeTech notes, hence offer prices were raised. At the same time, two utilities were in the market looking to secure near term delivery contracts for 100,000lbs and 260,000lbs of U3O8 respectively. There were ultimately six transactions concluded in the spot market last week, TradeTech reports, totalling 850,000lbs of U3O8 equivalent. Buyers were prepared to pay up as the week progressed.

TradeTech's weekly spot price indicator has risen US$1.25 to US$36.75/lb.

Two transactions were reported in the term markets last week, but neither involved end-users on the buy-side. Trade Tech's term price indicators remain unchanged at US$39.00/lb (mid) and US$46.00/lb (long).
 

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By Greg Peel

Kyushu Electric Power announced last week it would delay the restart of its Sendai unit 1 reactor, thus postponing the long awaited first restart of a Japanese reactor post-Fukushima. However the postponement is only for two weeks, allowing a little more time for the company to complete final checks and shifting the restart schedule into August.

Meanwhile a Japanese government proposal to return the country's energy mix to 20-22% nuclear generated by 2030 was approved in draft form last week. This represents a reduction from a pre-Fukushima 30%. Japan will seek to increase the contribution of renewable energy in the mix to help cover the balance of fossil fuel requirement.

On the other side of the world, France, too, is looking to increase its level of renewables in its energy mix as part of its ambitious emission reduction targets. However the government is also proposing to address its ageing nuclear reactor fleet by reducing the proportion of the mix provided by nuclear electricity generation.

At 75% of power generation, France's nuclear balance is the highest in the world. The government is proposing to bring that proportion down to 50% over a decade.

While the global trend appears to be running against uranium producers, the big offset is China, where reactor building is progressing a-pace.

Lower uranium prices have nevertheless begun to drive consolidation within the wider nuclear industry.

US-based Uranium Resources Inc has announced a merger agreement with Anatolia Energy with the aim of becoming a low-cost uranium producer from Anatolia's Temrezli project in central Turkey. French nuclear group AREVA and French utility Electricite de France will merge their reactor businesses into one group controlled by EDF. Both companies are 80% owned by the French government.

In Australia, Paladin Energy ((PDN)) has agreed to acquire the Carley Bore uranium project in the Carnarvon Basin, Western Australia, from Energia Minerals in a cash and scrip deal. Carely Bore compromises three connected exploration licences located 100km from Paladin's Manyingee project and will increase the company's indicated uranium resources by 30%.

A ban on uranium mining was only lifted fairly recently in WA but clearly for Paladin its WA prospects represent longer term plans. With uranium prices still struggling, Paladin's Kayekeleera mine in Mali remains on care and maintenance and its Langer Heinrich mine in Namibia is struggling to produce sufficient cash flow to service the company's debt obligations.

Plenty of news about in the uranium world last week but very little action in the market, industry consultant TradeTech reports. Buying interest has all but dried up and sellers are in no rush to drop prices in order to offload material.

That said, TradeTech's weekly spot price indicator did manage to tick up US50c to US$35.50/lb despite only four transactions being completed in the market last week, representing a mere 400,000lbs of U3O8 equivalent.

There were no transactions reported in the term uranium markets last week. TradeTech's term price indicators remain unchanged at US$39.00/lb (mid) and US$46.00/lb (long).

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By Greg Peel

The US is the world's largest nuclear power producer and consumer of uranium, Macquarie notes, accounting for some 30% of global reactor requirements. Last week the US Energy Information Agency published its annual marketing report for 2014.

The report noted that US inventories, in years-of-use terms, remain well above historical averages but at least have stopped growing, albeit current contract coverage is lower than it has been in recent years. On that basis there should be opportunities for uranium sellers in the US market this year and beyond, Macquarie suggests.

However it appears that uranium will remain in surplus for the foreseeable future, thus any positive price impact is dependent on utilities being willing to pay up for supply security.

While the news from Japan has not all been positive of late, last week did see the final permits issued for the restart of Kyushu Power's Sendai units 1 and 2. The first unit is expected to fire up in late July and the second unit is expected to follow in September.

Last week the Japanese energy minister insisted that due to the high cost of renewable energy, nuclear power must make up 20-22% of Japan's energy mix by 2030. Pre-Fukushima, it was 30%. Meanwhile over in France, the French parliament is set to vote on a bill aimed at increasing the use of renewables and reducing the country's reliance on nuclear power.

In potentially good news for uranium producer share prices, the head of China's National Nuclear Corp has announced China is looking to acquire foreign producers offering sufficient resource bases and production costs at the low end, in order to secure the country's uranium supply for its fast growing reactor fleet.

Despite all the newsflow, interest in the uranium market has waned to almost non-existent, industry consultant TradeTech notes. Buyers are prepared to buy if prices fall, but sellers are not prepared to give up ground. Last week also saw holidays in the US and UK, adding to the lack of interest.

Six spot transactions totalling 700,000lbs of U3O8 equivalent were reported in the week. TradeTech's weekly price indicator has fallen US25c to US$35.00/lb.

Three transactions were reported in the mid-term market last week but they were very small, totalling less than a million pounds. The good news is there is a reasonable amount of volume out there being sought on term contracts at present, even if things are moving slowly.  The bad news is TradeTech has lowered its term price indicators, to US$39.00/b (mid) from US$40.25/lb and to US$46.00/lb (long) from US$49.00/lb.

Last week's fall in the spot price implies a fall of US$1.00 over the month of May, to US$35.00/lb from US$36.00/lb. The biggest influence on the market over the month was news from the Tokyo Electric Power Company – Japan's biggest – that it was reviewing its supply contracts in light of growing inventories and a snail's pace of reactor restart expectations in Japan.

The bad news on this front is that TEPCO will not be buying further supplies but the good news is that the company does not intend to sell excess supplies into the market, as was initially feared.

The month of May featured 25 spot market transactions for a total of 3.0mlbs, down from 4.1mlbs in April, TradeTech reports. The term markets saw a total of 12 transactions, most of them small and not featuring end-users on the buy-side.
 

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