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Uranium Week: Uranium Reserve Hopes Rekindled 

Weekly Reports | Nov 17 2020

The weekly spot price continues its slide from May, while the hopes of US uranium producers rise on funding measures for a uranium reserve.

-Production may benefit from US uranium reserve
-No new Japanese reactors for a decade
-The weekly U3O8 spot price falls over -2%

Equity prices for US uranium producers rose by an average of 7% last week after prospects for increased demand for US uranium production improved.

This occurred as the Senate Committee on Appropriations released FY21 funding measures. Subcommittee allocations included a funding request within the US Department of Energy's (DoE) budget for a Uranium Reserve Program.

Under a uranium reserve program, the DoE’s Office of Nuclear Energy would buy uranium directly from domestic mines and contract for uranium conversion services. 

The DoE has previously stated the new stockpile is expected to support the operation of at least two US uranium mines, notes industry consultant TradeTech. It’s also expected to re-establish active conversion capabilities and ensure a backup supply of uranium for nuclear power operators in the event of a market disruption. 

 In separate news, the DoE released its Hydrogen Program Plan on November 12, to provide a strategic framework for the Department’s hydrogen research, development, and demonstration activities.

The plan, which aims to advance the affordable production, transport, storage, and use of hydrogen across different sectors of the economy, could provide support for the nuclear industry, notes TradeTech.

A key aspect of the strategy is to enable hydrogen production from a diverse array of low-carbon, domestic energy resources. These include renewables, nuclear energy, and fossil fuels (with carbon capture, utilisation, and storage).

Country News

Japanese Industry Minister Hiroshi Kajiyama indicated this week that the government will not approve plans to build new reactors over the next decade. This will allow a focus on regaining public faith in the nuclear industry.

Mr Kajiyama's position suggests the Ministry of Economy, Trade and Industry, which oversees the nuclear industry, is unlikely to discuss the option of building new reactors in the new Basic Energy Plan it is developing. 

However, Mr Kajiyama acknowledged it is still premature to discuss the issue, notes TradeTech. He also defended nuclear energy as a "necessary energy" source that the country will still need. He added that the government will watch for indications of public acceptance and the number of reactors reactivated over the next ten years. 

This is while the government considers any plans for building new nuclear power plants and how that relates to the nation's goal of carbon neutrality by 2050.

Uranium Pricing

TradeTech's Weekly Spot Price Indicator is US$29.35/lb, down -US$0.65 from last week. 

The weekly spot price moved downward steadily through the week, declining a total of -2.2% since November 6.

While the Weekly Spot Price Indicator remains 16% above its value from a year ago, the indicator has been on a general downward trajectory since mid year. The indicator has averaged a 0.4%  weekly increase overall in 2020, but has averaged a -0.5% weekly decline since reaching a four year high in May. The average weekly spot price for 2020 is US$29.69/lb, US$3.86/lb above the 2019 average.

Purchasing activity remained light for the second week of November, with a slight uptick in transaction volume to 850,000 lbs U3O8 this week from 800,000 lbs reported last week.

As year-end approaches, sellers are exhibiting increased willingness to lower their offer prices in order to meet end-of-year sales objectives and to generate revenue, reports TradeTech.

Despite supply being confined to only two or three sellers, exceptionally thin demand  resulted in downward price pressure on the spot uranium price. 

TradeTech's term price indicators are US$33.75/lb for mid-term and US$37.00/lb long term.

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