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Uranium Week: No Traction

Weekly Reports | Aug 08 2017

By Greg Peel

The parlous state of the US nuclear power industry continued to dominate the uranium industry last week.

A subsidiary of South Carolina Gas & Electric and the state-owned Santee Copper announced last week they would walk away from two partially built reactors at the Summer Nuclear Station, despite having already spent billions. The projects were over time and over budget.

The decision has sparked an inquiry by the state nuclear regulator as to why the projects have failed and South Carolina senators have called for a special session to discuss the project and ensure no laws have been breached.

Faced with a similar decision, Southern Co has decided it still sees the benefit of completing its two-unit construction project at Plant Vogtle in Georgia despite estimates the cost has blown out to over US$25bn. While Southern Co is still deciding the fate of the project, which is also well over time and budget, the CEO has conceded there would be “nothing to show” for the company’s investment if it were to simply walk away.

The news did not engender any confidence in the uranium spot market last week, which currently features a wide bid/ask gap on the vagaries of differing delivery timing and location. Five transactions were concluded totalling 500,000lbs U3O8 equivalent, industry consultant TradeTech reports. TradeTech’s weekly spot price indicator has fallen -US20c to US$20.40/lb.

The spot price has now been stuck below US$21.00/lb since mid-May.

Spot market participants continue to await an expected pick-up in utility demand in term markets to provide any reason to inflate bid prices. To that end, four transactions were concluded in term markets last week, several utilities are continuing to evaluate offers and new demand emerged in the long term market.

But such demand is doing nothing to prop up prices. TradeTech’s monthly mid-term price indicator fell at the end of July by -US5c to US$24.40/lb and the long term indicator by -US$2.00 to US$32.00/lb.

There was some good news last week nonetheless. There are currently five Japanese reactors that have achieved restart status – a process which has taken six years – and the Japanese Institute of Energy Economics believes there will be ten by March 2019.

Given the long period of time it took to get the count to five largely reflected the protests of local residents in relevant regions, one might have to take that forecast with a grain of salt.

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