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Uranium Week: Close But No Cigar

Weekly Reports | Jun 20 2017

The spot uranium market last week grafted closer to the US$20/lb mark, by US5c.

By Greg Peel

It remains a glacial process, but the number of Japanese nuclear reactors satisfying regulations and overcoming legal challenges to restart electricity generation is quietly growing. Last week a Japanese local court dismissed a request from local residents for an injunction to halt the restart of Kyushu Electric’s Genkai units 3 and 4.

The lawsuit was filed in 2011, four months after the Fukushima disaster. Kyushu Electric hopes to restart the reactors within the next few months, pending final safety inspections.

Only five Japanese reactors have to date passed those safety inspections, with the last two preparing for restart this month and next. There are a further 19 reactors waiting permission for restart. There are 42 operable reactors in the country.

Meanwhile the story is an opposite one in the US, where the most recent reactor threatening to shut down is the infamous Three Mile Island. If relevant states do not agree to provide subsidies for zero-emission energy as is the case for renewables, more will shut down due to a lack of economic viability in the face of cheap gas-fired energy.

The US nuclear industry did receive a boost last week, with the US Department of Energy announcing US$67m in grants to fund nuclear energy research, facility access and cross-cutting technology development long with infrastructure in 28 states. A total of 85 projects were selected for funding.

The news did little to inspire the uranium sport market, which for the third week running found plenty of buying interest below US$20/lb but none above. While many sellers held their offers steadfastly above US$20/lb in the hope of luring up buyers, enough broke ranks to ensure six transactions were concluded for a total of 800,000lbs U3O8 equivalent, industry consultant TradeTech reports.

Utilities were among the buyers, but it appears utilities are only really interested in picking up material opportunistically below the US20/lb mark. The past three weeks have seen TradeTech’s weekly spot price indicator graft its way up US25c to US$19.75/lb, then another US15c to US$19.90/lb, and last week a further US5c to US$19.95/lb.

There was one transaction concluded in uranium term markets last week, for delivery of 2mlbs over four years. Several other utilities are contemplating entry into the term markets during the September quarter, TradeTech reports.

Producers have been growing old waiting for the much vaunted rekindling of term market buying interest, having held high hopes for a couple of years now. In the meantime, TradeTech’s term market indicators have been quietly slipping lower.

They remain unchanged last week at US$24.25/lb (mid) and US$34.00/lb (long).

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