Weekly Reports | Apr 17 2018
The uranium spot market sunk further into inactivity last week, beholden to government policy decisions and escalating geopolitical tensions.
-Japanese restart expectations diminishing
-Russia tensions extend to uranium market
-Market activity minimal
By Greg Peel
An energy advisory panel in Japan last week indicated its support for the long term use of nuclear power as a means of achieving the country’s long term emission reduction targets. But at the same time, the panel suggested Japan should shift its focus from nuclear power, replace coal-fired generators with gas-fired, and increase the use of renewables in achieving the 2030 target.
In terms of 2050 goals, the panel suggested nuclear power should remain an option. The implication here is that Japan should consider building new, and safer, nuclear reactors, which is not part of government policy at present.
Over 40 nuclear reactors supplied power in Japan prior to Fukushima. Seven years later, only seven of those reactors have restarted. Two more reactors are schedule for restart in coming months, but expectations for the ultimate number of reactors to restart continue to fall, Citi notes. By 2020, the forecast is for only ten to twelve.
One barrier to restart is the government’s asset life cap of 40 years, Citi notes, given upward of five years of fuel savings are required to justify start-up costs. Japan’s current Basic Energy plan targets 22% nuclear by 2030 but this is seen as increasingly difficult to achieve.
Cold War
Given China is not an exporter of uranium, uranium has to date been absent from any US trade tariff list. Yet uranium has become a geopolitical lever nonetheless as the US steps up its sanctions against Russia – initially because of the Ukraine but now because of Syria as well.
The Russian parliament has drafted a bill to suspend cooperation with US companies in the nuclear power, aircraft and rocket engine construction industries, and to restrict import of certain products produced in the US.
The global uranium market is already in a state of flux, beholden to government policy decisions in the likes of Japan and the US which may yet be some way off. Further disruption is not welcomed.
After a relatively busy March, the first week of April saw a drop-off in uranium market activity and last week saw activity decline even further. Only four transactions were concluded in the spot market, industry consultant TradeTech reports, totalling 700,000lbs U3O8 equivalent.
TradeTech’s weekly spot price indicator did manage to rise US40c over the week to US$20.50/lb, but the current trend is for buyers and sellers to back off any time a more significant price move is signalled, ensuring the spot price has hung around US$21/lb for months – a price that for most is below the cost of production. Utilities are currently entering the market only on a “needs must” basis, rather than looking to add to stockpiles.
There were no transactions reported in uranium term markets last week. TradeTech’s term price indicators remain as $25.50/lb (mid) and US$28.00/lb (long).
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