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June 17, 2016 - The spot uranium price dropped sharply this week, hitting $26.00 per pound U3O8, the second-lowest level recorded since April 2005. TradeTech’s Weekly U3O8 Spot Price Indicator has declined nearly 24 percent since the beginning of 2016. Prior to the spot price settling at $25.50 on April 15, the previous lowest spot price was $24.00 per pound U3O8 on April 22, 2005. TradeTech’s U3O8 Spot Price Indicator has exhibited a negative compound annual growth rate of -14 percent over the last five years; the average weekly return over the same period is -0.25 percent. The U3O8 Spot Price Indicator has fallen 10 percent in the last month, the latest drop in a steady decline that began eight months ago ($37.75 per pound U3O8 on October 16, 2015).
 
The price decline follows recent news that four reactors in the USA are being shut down early due to economic pressures. The latest is the Fort Calhoun Station in Nebraska as the Omaha Public Power District confirmed this week that it would proceed with the early shut down of the 482 MWe  PWR (News, p. 4). Past and present board members and executives have said a turning point for the plant was the final version of the US federal Clean Power Plan, published in August last year.
Early proposals of the environmental legislation would have given operators of nuclear plants some credit for running power plants that did not emit greenhouse gases; however, the final rule omitted the credit making it uneconomic for continued operation of the Fort Calhoun unit.
 
In Japan, a ruling by the Otsu District Court upheld an injunction that has kept Units 3 and 4 of Kansai Electric Power Co.'s Takahama Station offline since March (News, p. 4). The Japanese utility has filed a separate legal challenge to the court’s decision, and said it hoped that when that ruling came, possibly in July or August, it will lead to restarts. The reactors have already passed safety checks introduced after the March 2011 Fukushima accident and received restart approval from local authorities.
 
Meanwhile, in France, the nuclear safety authority (ASN) has concerns about EDF's Fessenheim Unit 2 (900 MWe PWR), which was shut down on 
June 13, due to suspected steam generator issues. ASN launched an investigation after a quality audit by AREVA started in 2015, after its Le Creusot unit revealed irregular findings in the manufacturing tracking records of equipment for nuclear power plants.
 
One bright bit of news came from South Korea this week, as the nation’s nuclear regulator approved the restart of Hanul Unit 2 (967 MWe PWR), which has been shut down since May 9 for maintenance. The Nuclear Safety and Security Commission said that Hanul Unit 2 in Uljin will be fully operational by June 19, which will bring the number of reactors offline to four.
 
While it is difficult to quantify, there is little doubt that the announcement of premature shutdowns in the USA and the slow path to restarts in Japan have had a psychological impact on the spot uranium market. Thin demand, cash needs, and the negative sentiment created by these developments led sellers to aggressively lower prices in order to conclude sales. In addition, further price cuts were necessary to attract buyers due to mismatches in buyers’ and sellers’ desired delivery timing and locations. Once prices began to fall, buyers became more reticent to commit to purchases and sellers were faced with lowering prices yet again in order to move material. As the week came to a close, a total of nine transactions were recorded. Traders acted as buyers in seven of the nine transactions, with producers and traders participating as sellers.
 
TradeTech’s Weekly U3O8 Spot Price Indicator is $26.00 per pound U3O8, a decrease of $2.00 from last week’s Indicator and down $1.25 per pound U3O8 from the June 16 Daily U3O8 Spot Price Indicator.  read more