Commodities | Oct 07 2014
By Greg Peel
The month of September was all about a confluence of factors with the potential to impact on global uranium supply, spurring utilities into more urgent purchases and speculators into taking a punt on a post-Fukushima bottom having now been finally established. The risk of Russian sanctions, the industrial dispute at Cameco’s biggest mine and the legal battle between US converter ConverDyn and the US Department of Energy over government sales of material were all influential in sparking a jump in industry consultant TradeTech’s spot uranium price indicator to US$36.50/lb during September, its highest level since July 2013.
Earlier in the month the sell-side of the market, including producers and intermediaries, had stood back to let demand drive prices but by late in the month the sellers returned, given the plan worked surprisingly well. TradeTech’s spot price indicator closed at US$35.30/lb at end-September, up US$3.30 from end-August. The consultant reports 28 transactions totalling 4.1mlbs of U3O8 equivalent being concluded in September, slightly ahead of August’s 4.0mlbs.
The spot price remained unchanged up to last Friday as we entered the new month. The week to Friday saw six transactions totalling just shy of 700,000lbs of U3O8 equivalent, TradeTech reports, with utilities in the mix but intermediaries doing most of the buying.
Not only has demand for near term uranium supply been strong this past month, but urgency has spilled over into the term contract market. Upward pressure on the spot price is being reflected in mid and long term delivery prices. TradeTech has now lifted its mid-term indicative price to US$37.75/lb from US$34.50/lb and its long-term price to US$45.00/lb from US$44.00/lb.
The news highlight of the week was an announcement the US Department of Energy would provide up to US$12bn in loan guarantees for “advanced nuclear energy projects” as part of the Obama administration’s “all of the above” energy policy focused on reducing carbon emissions. The loans are intended to help finance the commercialisation of small modular reactors as well as enrichment, conversion and fuel fabrication projects.
The US news follows on from news Britain had agreed terms with the EU to secure billions of pounds of public funding for the new Hinkley Point nuclear facility. This breakthrough is a big boost for the UK government’s contract with French utility EDF, TradeTech notes, which would provide a template for the next wave of state-backed nuclear plants across Europe.
Meanwhile EU member Sweden is running into political difficulty in the other direction. The previous centre-right government has now been replaced with a coalition between the Social Democrats and the Greens. The county’s original nuclear reactors are now starting to reach the end of their planned 40-year lives and while the Social Democrats are supportive of the previous government’s intention to replace the reactors, the Greens simply want to see them shut down.
Nuclear power provides 40% of Sweden’s electricity supply.
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