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Uranium Week: Utilities On The Move

Weekly Reports | Jan 29 2019

Utility interest is building in the uranium market both for term deliveries and spot market purchases.

-US nuclear generation set to decline
-Kazakhstan cuts production and exports
-Spot price moving up

By Greg Peel

The US Energy Administration last week published its 2019 Annual Energy Outlook, which projects US energy markets through to 2050. The report suggests the US will become a net energy exporter by 2020, on a combination of increased crude oil and LNG exports and slowing growth in domestic consumption, and will remain so through to 2050.

Over the period, the EIA’s base case sees US coal-fired electricity production dropping to 17% of total generation from 28% in 2018, and nuclear generation dropping to 12% from 19%.

The decline in nuclear power will result from plant retirements, and no plants coming into operation from 2021, meeting slowing consumption growth, cheap gas-fired power and subsidised renewable energy generation.

On the other side of the ledger, Kazakhstan’s uranium exports fell by -19% by volume in the nine months to September 2018. State-owned Kazatomprom said at the beginning of 2018 it planned to cut production by -20% over three years and achieved a cut of -6% in the first half of 2018. This suggests the company is ahead of schedule, having fallen well short of production cuts promised over 2017.

Since 2009 Kazakhstan has been the world’s largest producer of uranium. To September 2018, 57% of Kazak exports made their way to China, 18% to Canada and 17% to Russia. The latter two are a little surprising given both are themselves major uranium producers.

Firing up for 2019

As the uranium market begins to ramp back up for 2019, after the traditional Christmas-New Year hiatus, utilities are assessing their requirements in all of the spot, mid-term and long-term markets. With several tenders out for term market delivery contracts, market participants are waiting to evaluate pricing.

This meant the number of spot market transactions was lower last week at five, totalling 740,000lbs U3O8 equivalent, but new buyers entered the market, industry consultant TradeTech reports, across the spectrum of utilities, intermediaries, producers and investors.

TradeTech’s weekly spot price indicator rose US25c to US$29.10/lb.

There were no trades in term markets last week but there are some sizeable delivery contracts out to tender for deliveries out to 2025 and beyond.

TradeTech’s term price indicators remain at US$29.00/lb (mid) and US$32.00/lb (long).

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