Dec 3 Uranium week: volumes surge

Weekly Reports |Dec 04 2018

Uranium spot market volumes in 2018 are almost 40% above record 2015 volumes with another month to run.

-2018 volumes surge-Unfamiliar players in the market-Spot price continues to rise

By Greg Peel

By the end of November, over 62mlbs U3O8 equivalent had changed hands in the uranium spot market. That's almost 40% above the record annual volume set in 2015, industry consultant TradeTech notes, and there's still December to come.

March of 2015 saw the spot price peak out around US$39/lb before falling slowly to US$34/lb by year-end. Selling began to accelerate in 2016 to a low under US$18/lb in December that year. An attempt to rally in 2017 failed and by March 2018, the spot price was back at US$20/lb once more.

The price has done nothing but move up ever since.

Over the period, uranium producers responded by cutting production, mothballing mines or shutting down altogether. Those with delivery contract obligations began buying uranium in the spot market rather than producing it at a higher cost. The more production was shut down, the more producers appeared as buyers in the market.

This year has also seen the rise of the new uranium speculator, via listed investment funds which have bought and stored product on the assumption the price will rise in future.

Back in 2015 actual consumers of uranium were well stocked and saw little need to rush into purchases despite historically low prices on offer. By 2018, as prices continued to rise, utilities started to become a little more anxious.

The end result is a current spot price that is 33% above the 2017 average price of US$21.94/lb.

Nearly 1mlbs U3O8 equivalent changed hands in the spot market last week, 500,000lbs of which was traded on the last day of the month. The spot price shot up early in the week but this brought in the sellers, such that TradeTech's weekly spot price indicator closed the week up US10c at US$29.10/lb, and up US$1.10 from end-October.

Uranium term markets saw three transactions completed in November totalling 4mlbs. TradeTech's term market indicators remain unchanged at US$30.00/lb (mid) and US$31.00/lb (long).

Macron Slows Down

French president Emmanuel Macron has been forced to rethink the country's nuclear energy policy. A prior policy set in the wake of Fukushima committed France to a reduction of nuclear power as a percentage of total electricity generation to 50% by 2025. Last week Macron confirmed the timing for that target will be extended to 2035.

Macron nevertheless outlined plans for the closure of 14 reactors in the 2020-35 period, beginning with Fessenheim units 1 and 2, France's oldest reactors.

Meanwhile, Poland has become the latest emerging market to jump on the nuclear bandwagon. The country's energy ministry last week announced plans for Poland's first reactor to be completed by 2033, pending government approval.

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