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Uranium Week: Break Up?

Weekly Reports | Jun 27 2017

It was only a small gain but spot uranium has managed to trade above resistance at US$20/lb.

By Greg Peel

After four weeks of incremental gains, the weekly spot uranium price has managed to break through the US$20/lb barrier that had appeared to be a line in the sand for opportunistic buyers. Industry consultant TradeTech’s weekly spot price indicator rose US20c last week to US$20.15/lb.

Prices gradually rose throughout the week with traders active on both sides, but utilities were amongst the buyers in six transactions totalling 700,000lbs U3O8 equivalent. For the prior three weeks, buyers had backed off every time sellers tried to lift offers above the US$20/lb mark.

In supply-side new last week, the government of the state of Western Australia announced it would reinstate a ban on uranium mining, as had been promised ahead of the election of the new Labor government. The prior conservative government had lifted the state’s long standing ban and in its tenure granted approval for production at four uranium projects.

The new government has exempted those approved projects from the ban, hence Cameco’s Kintyre and Yeelirrie projects will be allowed to proceed along with Vimy Resources’ ((VMY)) Mulga Rock and Toro Energy’s ((TOE)) Wiluna.

In demand-side news, South Korea’s new president announced he would halt plans to build new nuclear reactors and will not extend the lifespan of existing reactors in his policy to phase out nuclear power.

President Moon Jae-in also plans to phase out coal-fired power and steer the country’s energy consumption towards renewables and LNG. South Korea currently has 25 nuclear reactors supplying around a third of the country’s power needs. Eight more had been in the planning process. Moon would like to see 20% of power provided by renewables by 2030.

The US Energy Information Agency released its Uranium Marketing Annual Report for 2016 last week. The report noted US nuclear power plants purchased 50.6mlbs U3O8 over the year, -10% down on 2015, at an average price of US$42.43/lb, -4% down on 2015.

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