Uranium Week: Japan Moves Forward

The uranium market was back in business last week following what was effectively a holiday week with the US Independence Day break in the middle.

Industry consultant TradeTech reports seven spot transactions concluded in the week totalling 1mlbs U3O8 equivalent but such solid trading volume is more reflective of catch-up than increased demand, TradeTech warns. Activity slowed into week’s end.

TradeTech’s weekly spot price indicator rose US25c to US$23.25/lb.

Four transactions were reported in uranium term markets last week but not for notable volume. Utilities remain reluctant to make commitments while the section 232 petition in the US hangs over the market, with no sign of any decision soon.

TradeTech’s term price indicators remain at US$26.50/lb (mid) and US$28.00/lb (long).

Shot in the Arm

The pace of Japanese reactor restarts post Fukushima has to date been glacial at best, with only nine of an original forty-plus reactors having restarted in the ensuing seven-year period. Market analysts have not held much hope for an acceleration, but the approval of the Japanese government’s Basic Energy Plan last week may provide some hope.

Under the plan, Japan’s energy mix target for 2030 is 20-22% nuclear, 22-24% renewable and 26% coal-fired, in line with a plan put forward three years ago.

In order to reach a 20-22% nuclear ratio by 2030, a further 21 reactors will need to be restarted over 12 years.

While it’s all very well for the federal government to set such a target, restart approvals still ultimately come down to approval at local and provincial government levels and from relevant courts. This, in turn, comes down to whether local residents living nearby protest against reactor restarts due to safety concerns.

To that end, local residents did win a victory in a local court to force the suspension of operations at Kansai Electric’s restarted Ohi units 3 and 4, but that decision was last week overruled in the High Court. Residents claim the plant is vulnerable to major earthquakes.

I imagine a lot of things are vulnerable to major earthquakes, but one can’t blame the Japanese for being fearful in the wake of Fukushima.

While restart approval requires legacy Japanese reactors to satisfy new, stringent safety requirements, today’s next-generation reactors are not only safer but more cost effective. To that end, the Japanese government is seeking to launch a public-private initiative with the aim of building such reactors, with an eye on the 2030 energy mix goal.

Greg Peel

About Greg Peel

Greg Peel joined Macquarie Bank in 1986 and acquired trading experience in equities, currency, fixed income and commodities derivatives, ultimately being appointed director of equity derivatives trading. He later published In With The Smart Money (a plain English guide to the mysterious world of financial markets and derivatives) and acted as a consultant to boutique investment funds. In 2004 Greg joined FNArena as a contributing writer. He is now a director and principal of the company. Greg compliments the journalistic background of the FNArena team with lengthy experience as a financial markets proprietary trader.

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