In this list
Electric Power

US uranium buyers consider options as Trump mulls trade action

Energy | Coal | Thermal Coal | Electric Power | Emissions | Nuclear | Renewables | Energy Transition | Natural Gas | Oil | Crude Oil | Refined Products | Gasoline

China's climate conundrum: Carbon neutrality 2060 and its implications for fossil fuels

Electric Power

Platts Forward Curves – Gas and Power

Shipping | Energy | Coronavirus | Agriculture | Metals

Asia Pacific Shipping Forum

Coal | Electric Power | Nuclear | Renewables | Natural Gas

Japan's METI to compile 'emergency response' for summer, winter power outlook: minister

Energy | Coal | Electric Power | Emissions | Renewables | Energy Transition | Natural Gas

Global thermal, coal-fired generation rebound at odds with accelerating net zero pledges

US uranium buyers consider options as Trump mulls trade action

US-based uranium market participants are anxiously awaiting a decision from President Donald Trump on whether to take protectionist action on imports of the element that fuels nuclear reactors.

Trump is weighing a decision on a January 2018 petition by US uranium producers Energy Fuels and Ur-Energy that asked him to require US nuclear plant operators to purchase 25% of their uranium annually from domestic producers, citing national security concerns of relying on uranium imported from the CIS nations. The decision is due July 15, although market sources have speculated the administration’s action may be delayed.

To guard against any sudden imposition of quotas or tariffs, potentially as soon as mid-July, companies have been buying and inquiring about buying uranium that is not mined in Kazakhstan, Uzbekistan or Russia, market sources have reported.

The interest, and a slight premium emerging for uranium from non-former Soviet republics, may presage a bifurcated market for uranium, the fuel for the world’s nuclear reactors, some market participants have said.

“People are trying to second-guess [Trump’s trade action,] or at least minimize their risks from it,” said Scott Lawrence, managing director of Numerco, a London-based uranium broker, during a presentation at the World Nuclear Fuel Markets conference in Lisbon in early June. In almost all recent uranium transactions, the origin of the material has been defined in contracts, a change from previous behavior, he said.

That makes it harder to match buyers and sellers and to concentrate liquidity, he said.

Despite the trend, any divergence in pricing based on country of origin is a “short-term blip” in the overall commoditization of uranium, Lawrence said.

Other market participants noted that there is not a significant price spread between CIS-origin uranium and material from the rest of the world, a sign the market may not be expecting much of a disruption from any Trump trade action.

Utility fuel buyers, producers, intermediaries and a consultant interviewed since late May have said they know of deals or offers where one party stipulated that uranium must not originate from Russia or the other former Soviet republics now known as the Commonwealth of Independent States, or CIS. CIS countries accounted for about 40% of uranium acquired in 2018 by US nuclear plant operators, the US Energy Information Administration said in a report in May.

Purchase of uranium by US utilities, 2017-2018

The petition has sparked a bitter debate over the need for protection for the US uranium miners, with US utilities arguing that any tariffs or quotas would increase their costs at exactly the moment when power prices have made nuclear plants borderline unprofitable. A US utility group has said raising the costs of nuclear fuel could spell the demise of a number of nuclear plants.

The miners, on the other hand, have argued that nuclear fuel is an exceedingly small portion of US nuclear plant costs. They say that without protection, all US production would cease and the country’s utilities would rely on foreign suppliers who could cut off the flow of uranium for any reason.

Utilities have said there is an oversupply in uranium globally and most uranium comes from allies such as Australia and Canada, minimizing the concern that hostile suppliers could disrupt their access to nuclear fuel.

The US Department of Commerce sent its recommendations on the petition, which have not been made public, to Trump April 14. The president has up to 90 days from receipt of the recommendations to act on them, although he can extend the period. Under Section 232 of the Trade Expansion Act, Trump could require US utilities to buy a percentage of their uranium from domestic producers, impose import tariffs, or quotas, or a combination of these, or choose to do nothing.

“Some market participants are sensitive to [uranium’s] origin,” given the potential forTrump to take actions that affect the availability and/or price of non-US uranium, Tim Gabruch, vice president, commercial, for Canadian-based Denison Mines, said in an interview. “Origin is certainly something I've given greater consideration to in recent transactions, ” he noted.

“There have been spot requests for uranium with origins excluding Kazakhstan, Uzbekistan and Russia  reported, but it has not been for large amounts,” Thomas Meade, principal with Energy Resources International, an industry consulting firm, said in a recent interview.

“Overall we  have not seen any big steps taken by U.S. buyers so far, as they are mostly waiting to see what the new ’rules,’ if any, will be” after Trump announces his decision, Meade said.

One market participant said he believed the interest in non-CIS uranium began with a single buyer and then spread to some other market participants.

Avoidance of CIS uranium began in mid-May, an intermediary said in an early June interview.

Paul Goranson, Energy Fuels’ executive vice president, said in an interview, “we are seeing very preliminary and confidential” inquiries by companies he declined to identify, about buying US-origin uranium rather than Russian and CIS material.

Goranson said there is speculation that there will be no import restrictions on material originating from Canada and Australia, as those countries are US allies and have been exempted from some previous tariffs imposed by the Trump administration.

Should utilities be required to buy 25% of uranium needs domestically, a US utility uranium buyer said in an interview this month, the price of a pound of domestically sourced U3O8 could rise to between $75/lb-$100/lb.

S&P Global Platts assessed the spot price of uranium at $24.84/lb July 3, based on the mean of assessed activity for U308 delivered over the next 12 months.

Platts uranium spot price U3O8 2018-2019

Imposition of a quota would create a bifurcated uranium market, Meade said. “US origin [uranium] would see an increase [in price] in the tens of dollars [per pound], because US production is at significantly higher cost than current prices,” he said.

“Non-US origin uranium would likely see a few dollar per pound decrease" in price, he said.

The price difference now for spot uranium from CIS countries and non-CIS countries is minimal, one market participant said in early June.

Even a small premium could affect the future of US nuclear plants, Jean Shobert, director of nuclear fuel supply for Exelon, the largest US nuclear plant operator, said during a presentation at the uranium conference June 10. “Another 40 cents or a dollar on a per-megawatt-hour basis can most certainly make the difference between keeping a plant open or shutting a plant down,” she said.

Additional reporting by Jim Ostroff