Weekly Reports | Apr 29 2020
The virus has curbed uranium production, but also utility demand. Prices continue to rise ahead of an expected return of utility demand.
-Utilities focused on safety management
-Supply curtailments continue to underpin uranium prices
-Trump’s Working Group Report finally published
By Greg Peel
While nuclear power generation is deemed an essential service at this time, allowing for restriction exemptions at operating facilities, those facilities still have to manage worker safety, as do those currently offline for refuelling. The result is a pause in procurements of uranium.
Once self-isolation guidelines are relaxed, and business activities return to something more normal, it is expected, industry consultant TradeTech reports, utility focus will then return to procurement strategies.
Several utilities are thus expected to return to the uranium market by the northern fall, or perhaps as early as summer.
The timing is somewhat unfortunate, given uranium spot prices are now 32% higher than a year before. Although the more recent kick-up in prices has been a result of what little remaining production there was being shut down due to the virus. Prior to this year, production had been widely curtailed simply due to too-low prices.
So one has to assume that if restrictions are lifted due to the virus being under control, most recent lost production will return as well to provide some balance. In the meantime, spot market activity was yet again elevated last week, and the spot price rose ever higher.
Nineteen transactions totalling 2.3mlbs U3O8 equivalent changed hands. TradeTech’s weekly spot price indicator rose another US95c to US$33.20/lb.
Prices in mid and long term markets are also on the upswing, TradeTech notes, but are lagging behind spot given only limited utility interest at this stage, for delivery windows just beyond spot.
TradeTech will review its term price indicators at the end of the month but for now they remain at US$33.00/lb (mid) and US$34.00/lb (long).
Long Time No Hear
Long before the virus appeared, the US was struggling with the conundrum of nuclear power being uncompetitive against gas-fired and subsidised renewable power, and uranium production being uncompetitive against cheap imports from the likes of Russia, but also from Canada.
Two uranium producers petitioned the government to force already uncompetitive power generators to purchase a minimum 25% of requirements domestically.
Given the conundrum, the White House chose to instead set up a Nuclear Fuel Working Group to review the entire US nuclear industry, from uranium mining to enrichment and power production.
It’s been almost a year since the Working Group was established and over two years since the two uranium miners submitted their petition, but the report, entitled Restoring America’s Competitive Nuclear Energy Advantage, is finally out.
The strategy outlines potential actions that could enhance the positive attributes of nuclear power, revive capabilities of the uranium mining, milling, and conversion industries, strengthen US technology supremacy, and drive US exports, while assuring consistency with US non-proliferation objectives and supporting national security.
Sounds like a panacea. The details will be interesting. If its costs the US government money, it’s really not the right time to be sticking out a hand. We recall that President Trump’s initial plan to save the US oil industry, before oil prices went fully into meltdown, was to purchase oil for the country’s Strategic Reserve.
Due to the cost of virus-related fiscal relief packages, that plan was shelved.
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