May 1 Uranium week: supply contracting, price unmoved

Weekly Reports |May 01 2018

Ongoing supply cut announcements from uranium producers continue to have no impact on the spot price.

-Minor rise in spot price-More production cuts-Reactor number 8 to restart in Japan

By Greg Peel

Activity was relatively brisk in the spot uranium market last week, industry consultant TradeTech reports, with utilities, producers, traders and speculators all represented on the buy-side. Seven transactions were concluded totalling 850,000lbs U3O8 equivalent.

Yet TradeTech's weekly spot price indicator managed only to rise US25c to US$21.00/lb. Weekly price moves of such magnitude have become standard fare in 2018, leaving the spot price unable to ever move meaningfully away from the US$21/lb level.

Demand is nonetheless building for material to be delivered later in 2018 and into early 2019, feeding the assumption that prices should pick up later this year. Right now, buyers feel no urgency to pay up for spot delivery and a lack of "have to" sellers is keeping volumes and prices at bay.

It has to be said the uranium industry has been expecting demand to pick up "next year" for the past several years.

And it's not that producers aren't playing their part.

Supply Side Dwindling

Australia's Paladin Energy ((PDN)) said last week it would begin taking steps to place its Langer Heinrich mine in Namibia into care & maintenance. The mine is not currently producing new ore, rather production is limited to processing stockpiles, but with uranium prices "stubbornly low", management has decided even this is not a commercial option at present.

Australian-listed Peninsula Energy ((PEN)) announced it would suspend development of its Karoo project in South Africa due to weak market conditions, focusing efforts solely on its project in Wyoming.

Canada's Cameco last year announced significant asset shutdowns in an attempt to optimise its portfolio and reduce costs. The company's earnings result release last week noted a -64% drop in production compared to the same quarter a year ago.

The only encouraging news last week came from Japan's Kyushu Electric Co, which announced it would restart its Genkai unit 4 plant in May, bringing to eight the number of Japanese reactors restarted since Fukushima.

The pace of restarts nevertheless continues to slip against prior estimations.

There were no transactions in the uranium term market last week. TradeTechs' term price indicators remain at US$25.50/lb (mid) and US$28.00/lb (long).

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