Commodities | Aug 09 2016
By Greg Peel
While the process of restarting Japan’s reactors drags on interminably, news of planned shut-downs of legacy US reactors over time has been the most disturbing news story in the uranium market these past few weeks. Last week there was finally some good news.
One by one US power companies have been announcing plans to close their reactors over the next few years, with more announcements expected, due to an inability to commercially compete with other power sources. The abundance of US shale gas is making gas-fired power generation a cheap alternative, while more expensive renewable energy power is enjoying the benefit of government subsidies based on zero emissions.
Once a nuclear plant is up and running it, too, is a zero-emitter, but to date US governments have not been forthcoming with subsidies, with which plant shutdowns could be avoided. Last week the State of New York enacted a new Clean Energy Standard that will indeed provide subsidies for nuclear power, on an upward sliding scale.
The subsidies will be provided for plants unable to cover costs at low electricity prices, which include older upstate plants for which shut-downs were otherwise deemed unavoidable.
The news from Japan is that Shikoku Power Co intends to restart its Ikata unit 3 plant on August 15. Ikata would represent only the third Japanese reactor restart. Other restarts remain planned but continue to be held up in court due to public protest.
Meanwhile, last week saw a US utility enter the spot market looking for anything between 100,000lbs and 1.2mlbs of U3O8 equivalent, industry consultant TradeTech reports. The uncertainty created by such a wide range of potential volume left the market unsure how to respond. Initially sellers backed right off, but by week’s end offer prices fell back again.
Four transactions were ultimately concluded totalling 500,000lbs U3O8 equivalent. TradeTech’s weekly spot price indicator has risen US50c to US$26.40/lb.
TradeTech’s term price indicators remain unchanged at US$27.40/lb (mid) and US$38.00/lb (long).
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