Weekly Reports | Feb 04 2020
January featured pricing volatility in the uranium market for ultimately little change.
-Little change in monthly U3O8 price
-Only one transaction in term markets in the month
-EIA predicts green future for US power
By Greg Peel
The month of January featured increased volatility in the uranium spot market, with prices fluctuating from an opening US$24.85/lb to a low of US$24.10/lb before industry consultant TradeTech’s weekly spot price indicator settled at US$24.90/lb to end the week up US30c and the month up US5c.
A total of 5.1mlbs U3O8 equivalent changed hands in January through 27 transactions. Of that total, 3.4mlbs were traded last week in 15 transactions.
While activity might have picked up, uncertainty remains. The market had been waiting to see whether waivers on Iran sanctions, due to expire on January 30, would be extended and indeed they were. But only for 60 days, which does not exactly remove waivers from the ongoing uncertainty list.
There is still no news on the Russia Suspension Agreement, and given that agreement does not expire until December, the market could be waiting some time. Meanwhile the US Department of Energy’s Office of Nuclear Energy has been directed to initiate a study aimed at reinvigorating the US uranium mining and conversion sectors, with no deadline set.
Last year the market waited months to learn the recommendations for President Trump’s nuclear fuel cycle Working Group, which ultimately recommended the US Department of Defense purchase and stockpile uranium mined in the US. This would support both national security and the US uranium mining industry.
But the president is yet to formally sign off on the recommendations, and no pricing details have been revealed.
2020 has thus begun with no less a level of uncertainty as 2019 and 2018. This is underscored by the fact only one transaction was reported in uranium term markets in the month of January, for 2.5mlbs.
TradeTech has reduced its mid-term price indicator to US$28.25/lb from US$29.00/lb at end-December, while its long-term indicator of US$33.00/lb remains unchanged.
Going Green
This time last year the US Energy Information Agency’s Annual Energy Outlook had gas-fired power as the leading source of US electricity generation out to 2050, accounting for 39% by that time. One year on the EIA has wound back that figure to 36%.
In 2019, the US generated 37% of its power from gas-fired, 24% from coal-fired, 19% from nuclear and 19% from renewables. The EIA’s 2020 predictions suggest 36% gas-fired by 2050, 13% coal-fired, 12% nuclear and 38% renewables.
In other words, by 2050 the US will produce more power from solar, wind, geothermal, hydroelectric and other renewable sources than any other source, the EIA predicts.
Renewable production will accelerate due to the falling cost of solar and wind power generation, federal tax credits for renewable energy and rising renewable energy targets. The sharpest decline in coal-fired and nuclear energy will occur in the mid 2020s before stabilising longer term as only commercially viable plants remain in service.
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