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September 23, 2016 - In a week marked by another drop in the spot uranium price, amid increasingly bearish sentiment about the near-term outlook for the uranium market, the International Atomic Energy Agency's (IAEA) latest projections for 2030 show that nuclear power could grow by 56 percent in the high-growth scenario and maintain its contribution to the global energy mix at the present level. Of course, Asia is a critical part of that growth, and the International Energy Agency reminded the industry this week that the restart of Japan’s nuclear power reactors is “crucial” to the success of the country’s energy policy.

China, which plans to construct more than 60 nuclear power plants in the next 10 years, will build about 30 reactors in the next five years and more in the five years after that, according to China’s State Nuclear Power Technology Corp. The latest unit of the Hongyanhe nuclear plant in Liaoning province is expected to enter full commercial operations within the year after the completion of its construction, China General Nuclear Corp. said this week. Unit 4 will be connected to the national grid within months and the development marks the completion of the first phase of the Hongyanhe Project. 
 
Kazakhstan, which made news last week when Askar Zhumagaliyev, CEO of state nuclear entity Kazatomprom, stated in a presentation at the World Nuclear Association’s (WNA) Symposium in London that the Central Asian nation would not expand production, announced this week that it has started construction of a low-enriched uranium (LEU) fuel bank. Kazakhstan and the IAEA signed an agreement to set up the IAEA LEU fuel bank in Oskemen, East Kazakhstan in August 2015.
 
The production sector, which has been sent reeling by low prices, struggles for survival and a way forward. In a letter to shareholders this week, Stephen Antony, president and CEO of US uranium producer Energy Fuels, states that while the uranium spot price is the lowest level observed since early 2005—or earlier, if you adjust for inflation—he believes today's market activity is laying the groundwork for the next recovery in uranium prices, and uranium buyers are being complacent at their peril. The company recently completed a round of financing this year (US$15 million [gross]), which Antony said would "enable us to properly invest in our best and lowest-cost projects, preparing the Company for a better future."
 
Despite current price levels, AIM- and ASX-listed Berkeley Energia has signed an agreement with Interalloys Trading Limited, a European-based commodity trading company, for the sale of the first million pounds of uranium from the Salamanca mine in Spain. The new agreement, which contemplates the sale of up to one million pounds of uranium concentrate over a five-year period starting from the commencement of the mine, which is forecast for 2018. The company states that the average price contemplated by the parties is above US$41 per pound.
 
The transaction, however, is the exception not the norm in today’s current price environment. The spot uranium price, in particular, is experiencing downward price pressure due to thin spot demand and increasingly aggressive pricing from sellers looking to secure business as the fourth quarter of a disappointing 2016 approaches.
Spot transaction volume fell this week after the flurry of activity that marked the end of the WNA Symposium in London. A total of five transactions are reported this week. Traders and financial entities sold the bulk of the material, with producers also participating as sellers. The recent drop in the spot price has garnered the attention of end users, as utilities look to scoop up low-priced material if their budgets allow; buyers this week included utilities as well as intermediaries.
 
However, the increased buying interest is failing to provide any price support. Instead, in defiance of conventional wisdom, any increase in demand is being met with lower prices. The explanation for this can be attributed to a number of factors, as varied as the sellers in the market. Increasing financial pressure and the need to generate cash, year-end sales objectives, and utilities that are generally well covered in the near term, have left sellers scrambling to lock in business. Sellers acknowledge that while significant demand is expected to emerge shortly in the mid- and longer-term markets, they see little spot demand and must capture sales opportunities as they arise.
 
TradeTech's Weekly U3O8 Spot Price Indicator fell $0.50 to $24.25 per pound U3O8 today—a 2 percent drop from last week's price of $24.75. The weekly spot price has declined 29 percent so far in 2016, and has dropped nearly 6 percent in the last five weeks. One transaction is reported this week in the term uranium market.  A producer announced that it had completed the sale for 1 million pounds U3O8 over a five-year period. read more