Commodities | Mar 24 2015
By Greg Peel
The battle between US uranium producers and enrichers and the US government, in the form of the Department of Energy, continues, with the DoE now taking a more conciliatory approach. Having last year angered the US uranium industry by dumping excess inventory onto the market, and drawn legal action as a response, the DoE has since called for suggestions and last week released a wide-ranging set of responses.
These included suggestions of an annual sales quota, a postponement of sales initially, sales only to already matched up buyers and so forth. The bottom line is that while the global uranium market has improved, it remains fragile. The US government began offering inventory into a uranium market last year which was wallowing at price lows, just as producers across the globe were curtailing production and battling negative cash flow. It is not hard to see why US uranium producers were angry.
As to how the DoE now proceeds is anyone’s guess, but presumably the department will be more considerate of prevailing market conditions.
On the other side of the coin, the endless testing regimen required of those Japanese reactors hoping to shortly restart continues to progress, with Kyushu Power’s Sendai unit1 having received approval for construction work upgrading the unit’s design to meet higher safety standards. This ticks the box on the second of a three-step process required before restart will be permitted.
Four other Japanese utilities have nonetheless weighed up the cost involved in upgrading their reactors to meet the tough new post-Fukushima safety standards and decided that for five reactors between them, the benefits will not justify the cost. Those reactors will thus be decommissioned.
Utilities and intermediaries were on the buy-side and producers and intermediaries on the sell-side of the eight transactions totalling 800,000lbs U3O8 equivalent completed in the spot uranium market last week, industry consultant TradeTech reports. Market sentiment fluctuated during the week, to the point the bid/offer gap stretched as wide as US$1.50/lb, but the week nevertheless ended on a stronger note. TradeTech’s weekly spot price indicator has risen US40c to US$39.50/lb.
Two transactions were reported in the mid-term market for moderate quantities, and offers are due next week for a US utility seeking 2mlbs for 2018-2022 delivery. TradeTech’s term price indicators remain unchanged at US$42.50/lb (mid) and US$50.00/lb (long).
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