Commodities | Aug 12 2014
By Greg Peel
Volumes in the spot uranium market dropped back to more familiar levels last week following the previous week’s spike to 1.5mlbs exchanged. Industry consultant TradeTech reports only four transactions conducted for a total of 500,000lbs U3O8 equivalent. But while interest may have retreated, urgency crept in.
Traded prices thus gradually improved over the course of the week, ending Friday up US$1.25 to US$29.75/lb on TradeTech’s spot price indicator. The market hasn’t seen a full dollar or more weekly move in months. Two reasons are cited as impetus for this sudden volatility.
On the demand side, the end-users of product have become a little nervous with regard the potential for a further step-up in Western sanctions against Russia to impact on the nuclear fuel market, either directly or due to Russian retaliation. To date, Western sanctions have not included any consideration beyond “goods and technologies” related to the energy (oil & gas) sector. Russian retaliation for stepped-up sanctions have specifically targeted Western agricultural exports. As yet untouched are Russia’s enriched uranium exports, from either side of the tit-for-tat battle.
On the supply side, TradeTech notes many routine spot market sellers have been less active this quarter due to previously concluded contracts. There is thus now a less desperate scramble to raise cash, given fewer “have to” sellers in the market, and supply has thinned as a result. Sellers are now anticipating an uptick in mid and longer term uranium demand in the coming weeks, and as such are positioning themselves to capture any spot market spill-over.
Could this be the beginning of a long, long awaited uranium price rebound?
The Russian conflict is one possible driver of a price rebound, at least temporarily, but critical to any sustained recovery in prices is the restart of Japanese reactors. On that front, Kyushu Electric Power announced last week it would not be able to submit final documents to the regulator with regard Sendai units 1 and 2 until late September or October. The Sendai units are the first to have granted safety approval by the regulator but restart still requires the submission of documents from Kyushu Electric and potentially several months of final approval.
Hence it is unlikely Japan will see any restoration of nuclear power before the winter.
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