Uranium Week - Turn for the Worse in Prices

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

Date posted: 05/31/17

Greg Peel reports that for the second year in a row, ten new nuclear reactors began power generation, the International Atomic Energy Agency reports, the highest number since the 1980s. At year-end, 448 reactors were in operation across the globe with a record net capacity of 391GW. Three reactors shut down permanently in the period and 61 were under construction. Last week the Swiss voted in favor of a referendum to prohibit new reactor builds and phase out nuclear power over time. On the supply side, U.S. uranium mines produced 2.9m lbs U3O8 in 2016, down -13% from 2015. The March quarter 2017 saw U.S. production fall -28% from the same period last year. One might be forgiven for thinking the global uranium demand/supply balance was tilted in favor of higher uranium spot prices, but nothing could be further from the truth. Two weeks ago industry consultant TradeTech weekly spot price indicator rose US25 cents to mark the first price uptick in two months, suggesting maybe a short-term bottom had been found. Last week that price fell -US$2.00. At US$19.50/lb, TradeTech spot price indicator is now down -26% from the high reached earlier in the year of US$26.50/lb, and only 4% above the multi-year low seen at end-2016. Utilities were among the buyers last week, in which seven transactions totaling 800,000 lbs U3O8 were concluded. But buyers showed no interest in chasing offers, forcing sellers to lower prices throughout the week. Buyers have become increasingly opportunistic, TradeTech suggests, stepping into the market only when sellers show a willingness to drop prices. The term market is not so bleak, with a handful of utilities currently evaluating offers for delivery for periods out to 2029. Market participants remain confident term demand will begin to increase in coming weeks. TradeTech term price indicators remain unchanged at US$27.00/lb (midterm) and US$35.00/lb (longterm).