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Uranium Week: Keeping A Lid On It

Weekly Reports | Mar 03 2020

Aggressive selling in the uranium market kept a lid on spot prices during February despite increased utility demand.

-U3O8 spot price range-bound
-February volumes drop from January
-Japanese reactor restarts still a slow process

By Greg Peel

Activity in the spot uranium market was relatively consistent through the month of February, industry consultant TradeTech reports. Only a handful of transactions were completed each week and the consultant’s weekly spot price indicator was restricted to a US50c range, from US$24.50 to US$25.00/lb.

Five transactions were concluded in the final week totalling 6700,000lbs U3O8 equivalent. TradeTech’s indicator closed the week and the month at US$24.90/lb, up US20c on the week and unchanged from end-January.

Over 2.5mlbs changed hands over the month in 17 spot market transactions. This compares to 5.1mlbs in 27 transactions concluded in January.

Market participants were encouraged to see an increased level of end-user buying interest emerge in the spot, mid and long term uranium markets this month, TradeTech notes. But this increased utility demand has yet to translate into higher prices.

Several parties concluded transactions or entered into negotiations with preferred suppliers in uranium term markets over the month. One utility selected a supplier for over 1.5mlbs U3O8 to be delivered over a five-year period beginning in 2023. Another utility concluded a purchase for UF6 to be delivered in the mid term period.

TradeTech’s term price indicators nonetheless remain unchanged from end-January, at US$28.25/lb (mid) and US$33.00/lb (long).

Keeping a lid on the market is a strong contingent of sellers that are highly motivated to secure end-user business, TradeTech reports. As a result, these sellers have submitted extremely competitive offers in some cases depending upon timing, delivery location, form, and the desire to establish a relationship with a particular buyer.

The monthly uranium spot price remains nearly -3% below the average for 2019.

Demand Side

Meanwhile, China’s nuclear electricity generation increased by 18% in 2019, taking nuclear’s share of Chinese electricity production to 4.9% from 4.2% in 2018. Clearly there’s a long way to go, and construction of coal-fired power stations continues a-pace. Beijing aims to have 200GW of nuclear generating capacity by 2035.

Tohoku Electric Power Co’s Onagawa unit 2 plant last week passed a safety screening by Japan's Nuclear Regulation Authority, which paves the way for the reactor to be restarted after anti-disaster measures are completed by the end of March 2021.

Onagawa Unit 2 is the second damaged reactor to pass the NRA's stricter safety standards introduced after the Fukushima accident in 2011. Tohoku Electric still needs to build an 800m seawall at the Onagawa facility and gain local resident consent before it can restart the plant. That’s one hell of a wall.

As the ninth anniversary of Fukushima approaches, only nine of Japan’s prior 40-plus fleet of reactors have restarted. None of those were specifically damaged in the tsunami. Seventeen more are currently working through the restart approval process. Tokyo hopes to return nuclear power to 20-22% of all electricity generation in Japan by 2030.

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