Commodities | Feb 18 2014
By Greg Peel
Canada’s global uranium major, Cameco, last week reported record production of 23.6mlbs of U3O8 in 2013, up from 21.9mlbs in 2012. However in line with uninspiring global uranium demand, Cameco’s total sales volume was static in 2013 from 2012.
Cameco is subsequently pulling back its mid-term production target and abandoning its 2018 supply goal of 36mlbs. The company suggested it continues to like the long term outlook for the industry but acknowledged the near and medium term pictures remain unclear. That said, Cameco still intends to bring its long-delayed and substantial Cigar Lake mine into production this quarter, with processing to begin next quarter.
Cameco’s news highlights the issue of current oversupply in the global uranium market while demand remains uncertain. Global swing producer Kazakhstan is limiting its production below capacity as a result, while Australian and other producers have shut down mines. Much still rests on a long awaited nuclear policy decision out of Tokyo.
To that end, the people of Tokyo went to the polls last week to elect their governor. Several candidates ran on anti-nuclear platforms but exit polls suggested only 23% support for immediate denuclearisation, industry consultant TradeTech reports. The majority of voters favoured a gradual approach to nuclear power, which was reflected in the election being won by a former cabinet minister and pro-nuclear candidate.
The Tokyo election provides pro-nuclear prime minster Shinzo Abe with an important gauge of popular opinion at a time when the extensive cost of alternative fossil fuel imports is undermining Abe’s aggressive economic revitalisation policy. In the face of apparent majority anti-nuclear views among the Japanese in 2013, the Abe government has held back on defining a specific post-Fukushima strategy. Meanwhile, nevertheless, safety tests at Japan’s idled reactors continue.
Last week Japan’s Ohi plant was cleared of seismic risk by the country’s Nuclear Regulation Authority, making it the first reactor to receive such clearance since the Fukushima accident.
As uncertainty continues to hold sway in the global uranium market, activity in the sport market remains muted. Last week saw 550,000lbs of U3O8 equivalent change hands, TradeTech reports, compared to 600,000lbs the week before. Market participants are closely watching for signs that the institutional buyer seeking 1mlbs of U3O8 is ready to start buying. The order is expected to be filled in small increments over the next several weeks or even months.
TradeTech’s spot price indicator finished the week down US10c from the previous week, at US$35.65/lb.
There was no activity in the term markets, although new demand emerged in the form of a US utility seeking material over a three-year period. TradeTech’s term price indicators remain unchanged at US$38.50/lb (mid) and US$50.00/lb (long).
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