Weekly Reports | Apr 10 2018
The elevated level of transactions in the uranium post market in March gave way to a quiet start to April, and still prices retreat.
-Spot price down -15% year to date
-US producers/end-users providing a conundrum
-Two subsidiaries of Ohio-based FirstEnergy Corp filed for bankruptcy
By Greg Peel
After a month of March highlighted by the third largest number of monthly transactions on record, the spot uranium market began April in a quiet fashion. Industry consultant TradeTech reports only four transactions concluded in the week, totalling 1mlbs U3O8 equivalent.
Traded prices remained steady throughout the week up until Friday, when one late seller affected yet another dip in price. That seller remained unsatisfied at the close of trade, and TradeTech’s weekly spot price indicator has fallen -US90c to US$20.10/lb.
The spot price is now down -9% in a month and -15% year to date. In the past four months, only four weeks have seen spot price increases.
TradeTech's term price indicators remain at US$25.50/lb (mid) and US$28.00/lb (long).
The uranium market remains in a state of flux, uncertain as to whether Donald Trump’s trade policy upheaval will impact on the uranium production and power generation industries. No mention has yet been made of a tariff on imported uranium – China not being a uranium exporter – but in a twist to the current trade theme, US uranium producers have called for the imposition of a quota on US power companies ensuring 25% of the uranium they purchase must be US-sourced.
Power companies have in turn pointed out that US nuclear power is already on the brink of extinction in the face of cheap gas-fired power and subsidised alternative energy, and that such a quota would be the last straw. Last week’s developments only serve to confirm such a declaration.
Rolling Closures
Two subsidiaries of Ohio-based FirstEnergy Corp have announced they will close their nuclear plants in Ohio and Pennsylvania in 2021-22 due to the inability to compete against gas. FirstEnergy has appealed to the respective state legislatures to consider policy solutions to keep the plants in service.
The company has also appealed to the US Energy Secretary to provide assistance under the Federal Power Act.
FirstEnergy has assured the two plants can keep operating for the time being thanks to cash at hand. But the two subsidiaries have filed for bankruptcy.
Late on Friday, after the close of the market, Donald Trump indicated the door was open to consider assistance for the plants and that the Administration is taking extraordinary steps to keep some US plants operating. The Department of Energy indicated it is reviewing FirstEnergy’s request.
The Trump Administration thus finds itself between the proverbial rock and hard place. One the one hand, US uranium producers are petitioning for assistance amidst persistently weak uranium prices, via the imposition of buy-American quotas for US power companies. One might think weak uranium prices would leave US utilities sitting pretty, but no, on the other hand power companies are petitioning for assistance in the face of even cheaper gas.
No solution will appease both parties. The dilemma is it is in the interest of national security to ensure diversification of base load power supply, and it is also in the interest of national security that the US can supply its own uranium to fuel that power supply, rather than be beholden to imports.
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