Commodities | Aug 19 2014
By Greg Peel
Stop the presses, the spot uranium price has now risen three times in four weeks, with one unchanged week in between. Industry consultant TradeTech’s spot price indicator ended last week up US75c to US$30.50/lb, having risen a total of US$2.25 over the four weeks. Young commodities traders have been consulting their veteran colleagues to assess when this last occurred.
Admittedly there is a geopolitical premium included within that price rise, with regard the Ukraine-Russia situation. To date no sanctions have been placed on Russia relating to nuclear energy, and nor has Russia retaliated in this space, but the fluid and uncertain crisis leaves the possibility open on both counts. Potentially the uranium spot price might drop were the stand-off to be resolved, but as TradeTech reports, it’s not all about geopolitics.
The spot price has now moved back above the US$30/lb level considered roughly to be the net cost of global production. Arguably it could never remain below that level for too long given the number of production delays/shutdowns that have transpired. There is perhaps also a glimmer of hope the first Japanese reactor restarts may be on the horizon, if not this year then at least before too long. In the shorter term however, end-user utilities, who have stood back and watched prices fall while standing atop sufficient stockpiles, have begun to show interest once more.
Only three spot transactions were concluded last week totalling 500,000/lbs of U3O8 equivalent but TradeTech reports several utilities have tenders out for supply deals and are expected to accept offers this week. Hence last week sellers backed off their offer prices in anticipation.
Not for the first time in recent years, the spot uranium market has become disjointed. Buyers for delivery in Europe are currently prepared to pay more than their counterparts in North America, and uranium hexafluoride (UF6) is being offered at a discount to the more commonly sought triuranium octoxide (U3O8). TradeTech has been forced to weigh up this fragmentation before deriving the one indicative spot price.
There was no activity reported in the term market last week, leaving TradeTech’s term price indicators unchanged at US$31/lb (mid) and US$44/lb (long).
Meanwhile, Japan’s Hokuriku Electric Power Co applied last week for a regulatory safety assessment of its Shika unit 2 plant in the hope restart approval can ultimately be granted. Hokuriku is the last of Japan’s ten nuclear operators to file for plant approval, bringing to 33 the number of reactors/plants across the country currently under regulatory review.
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