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Uranium Week: Stalled Again

Weekly Reports | Jul 30 2019

With section 232 uncertainty finally put to rest, nuclear utilities remain out of the market as they prepare submissions for the president's nuclear Working Group.

-No utility interest for spot uranium last week
-Rush on to prepare submissions
-Cameco to continue with spot purchases

By Greg Peel

It was hoped that once the section 232 decision was settled one way or the other, nuclear utilities would be free to return to a uranium market that has been wallowing over the past year as the market awaited the president's answer.

The fact President Trump rejected the request for mandated purchases of US domestic uranium, or any tariff on uranium imports, should have been a relief for utilities already struggling in a competitive energy market.

But no.

Now utilities have to scramble to gather information and make their submissions to the president's nuclear Working Group, which has 90 days to reassess the US nuclear power industry from mining through to electricity generation. It's a tough one, given:

-Even with uranium prices near historical lows, US nuclear power cannot compete with cheaper gas-fired and subsidised renewable power

-US uranium miners cannot compete with cheaper imported product, from both ally and foe alike

-Nuclear energy is considered a necessary element of energy security and a "must have" in the energy mix

-Nuclear energy is zero emission (once operating), although that is not likely a major consideration for Trump

All of the above adds up to a likely conclusion that if the White House wants nuclear power, it will have to fund it as if it were a budget cost item such as defence or welfare rather than a commercial enterprise.

While we wait to find out what the Working Group concludes, utilities remain out of the market. None were involved last week in the six transactions totalling 850,000lbs reported by industry consultant TradeTech, with traders and one financial entity on the buy-side.

TradeTech's weekly spot price indicator rose US25c to US$25.50/lb, although this is net of delivery location disparity.

Production Still Curtailed

Leading Canadian producer Cameco last week reiterated that it would continue to purchase most of its contract requirements in the spot market rather than mine its own, with its MacArthur River mine remaining shut down while the Cigar Lake mine and a joint venture in Kazakhstan provide the only production.

The impact of the announcement was one of traders pushing up prices for material deliverable in Canada, while down south, sellers were offering lower prices for material deliverable in the US.

TradeTech reports utilities are putting out the feelers for purchases from suppliers but are in no rush, with requests for proposal not to be issued for 60 to 90 days.

There were no transactions reported in uranium term markets last week. TradeTech's term price indicators remain at US$28.50/lb (mid) and US$31.00/lb (long).

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