Commodities | Jun 24 2014
By Greg Peel
With supply-side cutbacks having no impact on uranium prices to date, the industry is ever more reliant upon the restart of Japanese nuclear energy production. Last week the Japanese government released its annual energy report which highlighted the increasing cost of fuelling the country’s thermal power plants and the rising level of resultant carbon emissions.
Japan’s fiscal year 2013 (ending March) energy consumption was 88% dependent on fossil fuels compared to a peak of 80% during the 1970s oil crisis, industry consultant TradeTech notes. Imports of fuels including LNG cost Japan 10 trillion yen in FY2010, prior to the Fukushima accident, and 27 trillion yen in FY2013. Carbon dioxide emissions rose by 112mt to 486mt from FY2010 to FY2012. Previously Japan had taken a world-leading stance in emissions reduction.
It is of no-surprise the pro-nuclear Abe government has called for a return to nuclear power generation. The industry remains hopeful of the first reactor restarts by year-end, following stringent safety assessments, but local protests continue to cloud the issue.
Meanwhile, the French environment minister has proposed a bill that would see France’s electricity production mix shift to 50% nuclear, down from 70% today, balanced by an increase in renewables generation to 40% from a current 11%. The bill is consistent with Prime Minister Hollande’s election pledge.
The uranium term market saw some action this week, with two mid-term transactions involving intermediaries reported. TradeTech notes a buyer of 2.5mlbs of U3O8 equivalent for 2016-20 delivery is also to announce a preferred seller this week while another utility is evaluating offers for 7mlbs over a 2016-25 delivery period.
Activity in the spot market nevertheless remains lacklustre. TradeTech reports only three transactions were conducted last week totalling 400,000lbs of U3O8 equivalent. With supply continuing to outstrip demand, sellers are reluctantly lowering prices in an effort to close business. TradeTech’s spot price indicator has fallen another US15c to US$28.10/lb.
TradeTech’s term price indicators remain unchanged at US$31/lb (mid) and US$45/lb (long).
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
