Uranium: Interest is building

The spot uranium price ticked up again last week and growing 2019 demand suggests further upside. In this wire, Greg Peel discusses improving prices, the US conundrum, and new reactors for Japan. 

Improving prices

Following the prior week’s spurt of activity and breakout 5% price jump, the uranium spot market was again busy last week before fading towards the US long weekend. Utilities were once again among the buyers. Industry consultant TradeTech reports 1.4mlbs U3O8 changed hands in ten transactions. The consultant’s weekly spot price indicator rose a further US35c to US$22.85/lb.

Two term market transactions were concluded in the early mid-term delivery window. Prices for 2019 delivery continue to improve. TradeTech’s term price indicators remain at US$25.50/lb (mid) and US$28.00/lb (long) pending end of month review.

Regulators and Lawmakers

The US uranium and nuclear power industries continue to present conundrums for US regulators and governments state and federal.

Last week the New Jersey governor signed a bill providing a subsidy for the continuing operation of the state’s nuclear power plants via zero emissions certificates. The US nuclear industry has long argued nuclear power offers the same zero emissions as renewable energy and thus should not be undermined by the subsidies renewables enjoy.

The mining of uranium and the lengthy construction period for nuclear reactors is far from zero-emission, but that’s another story.

At the federal level, the US Department of the Interior has published a list of 35 commodities, including uranium, which are considered critical to the economic and national security of the country.

All well and good, but the reality is last week at a capacity auction held by regional electricity grid operator PJM, three of Exelon’s nuclear power plants failed to clear in the 2012-22 auction to supply the Mid-Atlantic and Midwest regions. The auction cleared 1000MW more gas-fired supply than last year and 500MW more coal-fired, but 7400MW less nuclear supply.

The US government wants to ensure nuclear power remains a necessary inclusion in a diversified electricity supply network for security of transmission sake, and that the uranium required to supply reactors is produced domestically to ensure national security.

The problem is, both industries will continue to run at a loss without taxpayer support.

Old and New

Over in Japan, focus has been on reactors that were operating prior to the Fukushima disaster restarting after a lengthy period of safety upgrades and approvals. However, at the time of the disaster there were also new reactors under construction, the design of which have subsequently had to be remodelled to meet much stricter safety standards.

Chugoku Electric last week moved to complete its Shimane unit 3 reactor, having this month requested consent of both the regulator and local government. Construction first began in 2005 before being suspended in 2011.

Chogoku’s request follows a similar application by Japan Electric for its Ohma unit 1 reactor back in 2014, the first request to be made for a new reactor. However, despite the timing difference, Shimane 3’s construction is more advanced and as such it would be the first new reactor to come on line in Japan post-Fukushima, assuming approval.

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