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Uranium Week: Talking It Up

Weekly Reports | Mar 20 2018

Stasis continues in the global uranium market but Canada is taking steps to encourage investment in nuclear power to save the planet.

-Price disparity ongoing
-Canada touts its resources
-Another reactor restarts in Japan

By Greg Peel

The world continues to await the Trump Administration’s final plan with regard trade tariffs, which would be implemented under section 232 of US law relating to national security.

The uranium market continues to await a decision on whether 232 will also be used to force a domestic uranium purchase quota upon the US nuclear industry.

In the meantime, the price gap between spot uranium delivered in the US and delivered in France blew out again last week. Six transactions were reported by industry consultant TradeTech in the spot market last week totalling 700,000lbs U3O8 equivalent. Four involved delivery in France and two in the US.

Typically any price gap between the two delivery locations reflects a simple balance of transportation costs to either site dependent on where the uranium was sourced. If the gap widens too far, intermediaries can step in and exploit a price versus cost arbitrage. However, the strength of demand currently prevailing in Europe, compared to a distinct lack of demand for product in the US, is pushing out price disparity to as much as US75c/lb.

TradeTech’s weekly spot price indicator has fallen -US15c to US$21.85/lb.

Act Global, Think Local

The Canadian government has announced the country will increase its reliance on nuclear energy in order to reduce carbon emissions, and will encourage other nations to do the same. A government spokesperson said Canada will promote nuclear power at a forum in Denmark to be held in May, seizing the opportunity “place nuclear energy at the centre of global efforts to fight climate change".

Very honourable. We won’t mention that Canada is the world’s second largest producer of uranium and that the world’s largest individual uranium production company — Canada’s Cameco – has been forced to substantially cut production in the face of wallowing uranium prices.

Then there were six

Kansai Electric’s Ohi unit 3 was restarted last week, bringing to six the number of Japanese reactors that have satisfied the stringent safety standards required by the regulator in the wake of the Fukushima disaster, which this month marks its seven-year anniversary.

That’s six reactors in seven years out of the more than forty in operation before March 2011.

Fukushima also brought to a halt Tokyo Electric’s (TEPCO) construction of the Higashidori plant in north-eastern Japan. Now TEPCO would like to commence discussions with other Japanese utilities about a joint venture to complete and operate the reactor. The plan has the backing of the Japanese government, which became TEPCO’s majority shareholders in a post-Fukushima bail-out.

TEPCO began building Higashidori only three months before the tsunami hit, so construction progressed no further than the very early stages. The global uranium market won’t hold its breath, given TEPCO hopes to have complied a joint venture plan by 2020.

There were no transactions reported in uranium term markets last week. TradeTech’s term price indicators remain at US$25.75/lb (mid) and US$29.00/lb (long).

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