Uranium Week: Struggling With Low Prices

Weekly Reports | May 25 2021

As the uranium spot price rose 2% for the week and 9% for the month, an EIA report revealed the lowest price paid since 2007 by owners and operators of US commercial nuclear plants

-EIA report reveals the 2020 price paid by owners and operators of US civilian power reactors
-The UK brings forward legislation to expand nuclear power
-Kazatomprom posts -79% lower first quarter income
-Uranium spot price rose by 2% for the week

 

By Mark Woodruff

The US Energy Information Administration (EIA) released both its 2020 US Uranium Marketing Annual Report and its 2020 Domestic Uranium Production Report last week. 

Despite covid roiling energy markets during 2020, the reports pointed to nuclear energy being a fundamental source of base load electricity generation (20%) with capacity factors steady at 94%, explains Canaccord Genuity. The broker believes coverage of future demand will continue to provide an impetus for a more active term market over 2021.

The EIA is responsible for collecting, analysing and disseminating energy information to inform policy making and efficient markets. It also adds to the public understanding of energy and its interaction with the economy and the environment.

The released reports in 2020 quantify developments in the US uranium industry, including decreased inventories, explains industry consultant TradeTech. They also showed an elevated aggregated contractual coverage rate among owners and operators of US civilian nuclear power reactors. Additionally, lower weighted average uranium prices and historically low uranium production were reported.

The Uranium Marketing Annual Report showed owners and operators of US commercial nuclear plants in 2020 purchased nearly 49mlbs uranium from US and foreign suppliers. These were transacted at a weighted-average price of US$33.27/lb, which represents a 1% increase in volume and a -7% decline in price compared to 2019 data. The weighted average price is the lowest price paid by owners and operators of US civilian power reactors since 2007.

Of the US deliveries, 76% were through longer-term contracts, averaging US$34.74/lb. As Canaccord notes, it’s always darkest before the dawn, with pricing failing to represent the marginal cost of production let alone the incentivisation price for restarts or new developments.

During 2020, 11.7mlbs or 24% of sales were on a spot basis, up from 10.5mlbs in 2019 and the highest since 2014. This illustrates that long-term contracts signed post-Fukushima (2011-2015) are starting to expire, explains Canaccord.

The report showed Australian and Canadian-origin uranium combined accounted for 42% of reported volumes by country of origin. Uranium purchased by owners and operators of US civilian power reactors from Russia again was the lowest weighted average price paid at US$25.73/lb, while purchases from Australia occupied the highest cost position at US$39.86/lb.

US and UK government support for nuclear 

The Biden administration's support for the US nuclear power industry was evident again last week. White House national climate adviser Gina McCarthy said that existing nuclear power plants will be needed in the administration's effort to reach goals to reduce greenhouse gas emissions. "In many areas continuation of the existing nuclear, as long as it's environmentally sound and it's permitted, is going to be absolutely essential". This is because it will provide time to develop renewable energy into a bigger part of the energy mix, McCarthy said at a Columbia University Centre on Global Energy Policy virtual event on May 18.

The UK government announced last week it will bring forward legislation to further commit to expanding domestic nuclear power. Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, made the statement in the House of Commons. 


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