Silk Road Yellowcake Trade and its Impact on Chinese Stockpiles of Uranium

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 02/18/16

Ian Hiscock opines that it is difficult to overstate the importance to the uranium market outlook of inventories held by Chinese utilities. Over the past 5-10 years, the magnitude of planned nuclear generating capacity in China has gained credibility, with new reactors successfully brought into operation and planned capacity underpinned by strong Government support. While the outlook for Chinese nuclear generating capacity has become increasingly clear, the same is not true of the magnitude of current uranium inventories or the timing of future inventory build. Chinese net imports of uranium rose from 2 to 3% of global demand in the late-2000s, to nearly 25% of global demand, or around 17,000 tUeq., just a few years later, where they have remained since. Given that Chinese reactor requirements were around 7,000 tU in 2014 and considerably less in previous years, this must have resulted in large amounts of stockpiled uranium in the country. But what is the size of this stockpile and what are the implications for the market? Attaching a number to the Chinese uranium stockpiles is no trivial matter. There are no published statistics and utilities do not release information about procurement strategies. However, it is possible to produce an estimate based on modeled consumption, domestic production and trade statistics. Unfortunately, the analysis by Hiscock shows that trade statistics relating to Chinese imports of uranium present a variety of issues and different interpretations of the statistics can have significant implications on the estimated industry market balance. For example, trade in natural uranium is typically reported on a contained uranium basis, but Chinese Customs report in tonnes of product and it is our understanding that this peculiarity has resulted in the overestimation of Chinese inventories by some commentators, by up to 20 to 30%. A smaller source of error is the product grade of Kazakh yellowcake destined for China.