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Uranium Week: Up By The Stairs

Industry consultant TradeTech’s weekly spot price indicator rose US10c to US$20.35/lb last week to market the seventh consecutive weekly gain. It all sounds very exciting until one considers the seven week rally amounts to only a 4.3% increase in price. Last Friday night nickel rose 4% in the session.

The spot price did trade as high as US$20.50/lb during the week before buyers again became reluctant to pay up. Five transactions totalling 800,000lbs U3O8 equivalent were concluded. Utilities did feature on the buy side, along with traders.

Late last year the spot uranium market appeared to have reawakened as prices rose quickly from a multi-year low to US$26.50/lb by mid-February. Despite seven weeks of uninterrupted rally, US$26.50/lb seems a very long way off.

The Demand Side

Uncertainty reigns on the demand side of the market at present. The new South Korean president’s administrative order that nuclear reactor construction be halted as part of a plan to phase out nuclear power altogether is causing confusion. The suspension period will run for three months in order that a public debate may be held.

Last week Korea Hydro & Nuclear power decided to suspend the construction of two new plants but not to abandon the projects altogether. Rather, the time will be used to conduct inspections, service equipment and so forth, at an estimated cost of US$88m. If a public debate is not held within the three months, KHNP will reconsider its position.

Meanwhile the new French government has set a target of reducing nuclear power in France’s energy mix to 50% by 2025. France’s state-owned generator operates 58 reactors in the country and may have to close as many as 17. However the exact number is not clear as the government is yet to develop a full climate plan.

Politics has become a major issue for the global nuclear industry, both negatively and positively. The construction of nuclear reactors and the development of uranium mines takes longer than the average democratic government term. Will presidents Moon Jae-in and Macron be ousted at the next election and replaced by a party with pro-nuclear policies?

The issue has arisen recently in Australia, where the conservative party won government in the state of Western Australia and overturned the longstanding ban on uranium mining that had supported by the prior Labor government, only to see a Labor government reinstated at the next election and the subsequent reinstatement of the ban. The new government did, nevertheless, exempt four mining projects under development as a result of the previous government’s policy.

The Trump Administration is supportive of the US nuclear industry and has pledged funds for technology development and so forth, but power policy lies with the individual states and there uncertainty reigns as to whether legacy reactors will need to be shut down on an economic basis or not. It will come down to the relevant state's energy policy.

And will Trump see another term? Will he see out this one?

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The content of this information does in no way reflect the opinions of FN Arena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FN Arena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FN Arena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.



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