article 3 months old

Uranium Week: No Immediate Need

Weekly Reports | Jun 19 2018

The US regulator has criticised the president’s directive that would see electricity providers forced to buy nuclear power.

-Regulator criticises Trump
-Korean reactor to shut down early
-Spot price wanes as demand subsides

By Greg Peel

The story in the US so far…

US legacy nuclear plants are closing down or threatening to close down as they cannot compete with gas-fired power, even with uranium prices at historical lows. Plans for new reactors are being put on hold or shelved.

US uranium producers have petitioned the government to force US nuclear plants, as a matter of national security, to buy at least 25% of their uranium demand domestically, which would push up the cost of nuclear power that already cannot compete.

Advisors have warned the president that nuclear power needs to remain as part of America’s energy mix, for reasons of national security.

President Trump intends to order US electricity grid operators, as a matter of national security, to buy a percentage of power from nuclear and coal-fired power plants to ensure they remain in operation.

And in this week’s episode…

Members of the US Federal Energy Regulatory Commission have criticised Trump’s directive, warning subsidising nuclear and coal power will unravel wholesale power markets. They do not believe there is a national security emergency in power markets that justifies immediate intervention, and warn a “hard and fast mandate” could force other resources off line.

In other news, Korea Hydro & Nuclear  Power will close its Wolsong unit 1 plant – the second oldest reactor in South Korea – earlier than previously planned due to the economics of keeping the reactor going.

The change in government in South Korea brought with it a Fukushima-driven anti-nuclear policy and an intention to phase out nuclear power over time. Wolsong would have closed anyway under this policy, but will close early given that, again, even at today’s low uranium prices, the plant is uneconomic.

Negative Feedback Loop

It is the reality of commodities markets that stronger demand leads to higher prices and higher prices lead to weaker demand. The spot uranium price has enjoyed a resurgence in recent weeks, driven mostly by speculation but also an element of utility buying.

The week before last the price hit US$24.00/lb mid-week before falling back to US$23.25/lb by week’s end. Last week demand dried up further, and industry consultant TradeTech’s weekly spot price indicator fell -US25c to US$23.00/lb to mark only the second weekly price decrease in the past two months.

TradeTech reports 650,000lbs U3O8 equivalent changed hands in six transactions.

There were no transactions in uranium term markets. TradeTech’s term price indicators remain at US$26.50/lb (mid) and US$28.00/lb (long).

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms