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Uranium Week: Fading Rebound

Weekly Reports | May 07 2019

The uranium spot price ended April above the end-March price, but momentum faded as the month wore on.

-April rally spot uranium fades
-US production plunges
-France to extend nuclear reduction timeframe

By Greg Peel

20 transactions were concluded in the uranium spot market in April, industry consultant TradeTech reports, totalling 4.6mlbs U3O8 equivalent. Having been on the slide in recent months, the uranium spot price finally saw some buying emerge in April.

However, the rebound proved short-lived. TradeTech’s spot price indicator traded as high as US$25.85/lb during the month but by month’s end had fallen back to US$25.15/lb, as perennial uncertainty with regard section 232 continued to deter buyers.

That’s still an improvement on the end-March price of US$24.90/lb, but by last Friday the spot price had slipped further, to US$25.00/lb, down -US20c for the week.

In term markets, only one transaction was reported. With several utilities reportedly considering mid and long term delivery contracts, TradeTech’s mid-term price indicator has risen US50c to US$28.50/lb for end-April.

TradeTech’s long-term price indicator remains at US$32.00/lb.

Supply Side

Weakness in the spot price continues despite ongoing reductions in supply. The US produced 58,481lbs U3O8 equivalent in the March quarter, down -83% from the December quarter and -74% year on year.

US uranium concentrate production for 2018 was -40% lower than 2017, and marked the lowest level of production since 1950.

Uranium producers continue to buy in uranium from the spot market to satisfy term delivery obligations rather than produce at historically low prices. Canada’s Cameco sold 4.8mlbs U3O8 in the March quarter, but produced only 2.4mlbs.

Cameco has indicated that in order to meet 2019 sales commitments, it expects to take delivery of 19-21mlbs this year, with 60% coming from the spot market.

Demand Side

France is committed to reducing its nuclear power capacity by -50% by 2025. However, the Macron government also intends to get tough on emissions reductions. Previously France’s emission reduction target was one quarter of 1990 levels by 2050. That has now been dropped to one sixth.

In order to achieve this target France would have to build new nuclear power plants, in contradiction to its aim to reduce nuclear power (a desire originally driven by Fukushima), so instead, the deadline to cut capacity by -50% has been extended from 2025 to 2035.

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