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Uranium Week: Speck Of Light

Weekly Reports | May 22 2018

The spot uranium price jumped 5% last week to mark the biggest weekly move in six months.

-Uranium spot price jumps 5%
-US government sales suspension to be extended
-Japan targets one fifth nuclear power

By Greg Peel

A total of 1.2mlbs U3O8 changed hands in the uranium spot market last week, industry consultant TradeTech reports, shaking the market out of its recent doldrums. Traders, producers, speculators and, most importantly, utilities, were all buyers.

As a result, TradeTech’s weekly spot price indicator has risen US$1.10 or 5.1% to US$22.50/lb, to mark the biggest price move in six months.

For some time market watchers have been anticipating an increase in utility demand given the feelers were being put out for potential delivery contracts. News of a number of global policy developments last week clearly prompted the market into action. Most influential was the news from Washington.

Legislation was introduced into the US House of Representatives to extend the current suspension of the Department of Energy uranium barter program. Prior to suspension, the DoE was periodically selling off uranium stockpiles and in so doing was ensuring a supply-side lid on the market at a time producers are being forced to sell below cost.

The legislation still needs to be passed in the House and a similar bill is being prepared by the Senate, in that strange way the US bicameral system operates, ahead of one bill being put to the full Congress. A House Committee has already approved the suspension, suggesting passage should not be too protracted.

Take a Ticket

In other US government news, or lack thereof, the petition put by two US uranium producers earlier this year to the Department of Commerce requesting an investigation into imports from foreign state-sponsored producers, on national security grounds, has to date gone nowhere. The problem is the request relates to section 232.

It is the same law used by the President to justify import tariffs on steel and aluminium, and the DoC is still working through numerous requests for exemption. Presumably Australia’s is somewhere in the pile. Given Beijing and the White House have now declared a “truce” in their trade war, it is not beyond the realms that the DoC will finally have worked its way through the pile just as Trump withdraws the tariff policy.

One of those sources of state-sponsored uranium imports is Russia. When the Russian parliament issued a bill back in April outlining a tit-for-tat response to US sanctions, the bill included a suspension of Russian cooperation with foreign companies in the nuclear and aviation industries.

Last week a second, amended bill was put to the Duma. Mysteriously, any mention of restrictions regarding nuclear power or nuclear fuel have been removed.

And in other news, the Japanese government continues to revise its Strategic Energy Plan and last week a new draft was put forward. The draft for the first time quantifies the energy mix the government is seeking to achieve by 2030.

The targeted mix is 27% gas-fired power, 26% coal, 3% oil, 20-24% renewable and…20-22% nuclear. Prior to Fukushima, nuclear power provided 28.6% of Japan’s electricity.

While the target can only be positive for global uranium producers, the reality is the pace of Japanese reactor restarts to date has been so slow, with no indication they may accelerate, that such a target appears overly ambitious at this stage.

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