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Uranium Week: Opportunistic Only

Weekly Reports | Jun 13 2017

By Greg Peel

The mood at the annual World Nuclear Fuel Market conference held in Budapest last week was one of uncertainty, industry consultant TradeTech reports. At best, fuel cycle companies can optimise operations and hope for signals the lengthy period of depressed uranium prices might come to an end.

News of the potential shutdown of America’s infamous Three Mile Island reactor served to underscore the issue of legacy US reactors having no choice but to close down if state subsidies are not offered for zero-emission energy in line with those of renewables.

But there is some hope on the flipside, with Hungary announcing expansion of its nuclear capacity with the construction of two new reactors, while over in Japan, Kansai Electric has restarted its Takahama unit 3 plant.

Despite many market participants being away from their desks last week, volume in the spot market was robust. TradeTech reports eight transactions concluded totalling over 1mlbs U3O8 equivalent.

Spot prices below US$20/lb continue to generate buying interest, suggesting the price may well have found a bottom. However, that’s about where the excitement ends given (a) as soon as sellers back off their offers to US$20/lb or above, interest vanishes and (b), while there was some limited utility buying below the level, the bulk of the buying came from traders and producers.

TradeTech's weekly spot price indicator has risen US15c to US$19.90/lb.

If producers are buying it’s usually to make up a shortfall on a contracted delivery obligation. Given most would struggle to produce uranium for anything near US$20/lb, it makes commercial sense just to buy material in.

Traders, on the other hand, are merely speculating that 20 is the end of the rope. If they’re wrong, a scramble could start in the other direction.

No transactions were reported in uranium term markets last week. TradeTech's term price indicators remain unchanged at US$24.25/lb (mid) and US$34.00/lb (long).

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