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Interrelationships in the nuclear fuel markets are complex, but awareness of the cross-links between those markets, and the transparency that comes from price reporting - as well as past experience - can send the signals industry players need to ensure the fuel cycle can meet the demands of a growing nuclear energy sector.

"My true passions are the complex interrelationships in the nuclear fuel markets. I fear that all too often folks who are involved into one market tend to pay insufficient attention to the other parts of the nuclear fuel cycle," Bryndza says.

As attention shifts to preparing for an expansion of nuclear power in the years to come, the outlook for nuclear fuel supply is naturally a major point of conversation. "We are seeing projected gaps in all the markets, and there's no doubt that new capacity must be brought online in a timely manner in order to meet the projected demand. The markets are sending very clear signals with the prices and the industry is moving rapidly to put this new capacity in place."

Recent announcements of major expansion projects by fuel cycle players including Orano, Urenco and Solstice - as well as new uranium projects - are positive developments. But there is some caution felt on the supply side not to overshoot with expansion, informed, at least in part, by past experiences.

"The impacts of supply growth that was undercut by Fukushima, they lasted a very long time. The memory is still fresh in the minds of the many. These were some dark, dark years for the industry. And the suppliers are careful in pacing their expansion and making sure that they are expanding if there's actual demand - not just demand signals, but actually demand that they can tap into - that would underpin their efforts."

New capacity is needed across all the sectors of the nuclear fuel market, and tightness that is being seen now will not be alleviated overnight, Bryndza says.

"But if I had to pick one aspect of the nuclear fuel cycle, I would say uranium mining may be the toughest segment. We have so many overlapping challenges here. We've got supply disruptions, geopolitical risks. We have trade actions, construction delays, rising production costs, you name it."

_{(Image: UxC)}

Thanks to geopolitical events over recent years, nuclear power - and nuclear fuel - are now viewed as a national security issue. This has translated into government policies aimed at ensuring domestic capabilities, including for materials such as high-assay low-enriched uranium (HALEU) which will be a mainstay of the emerging fuel cycle for small, advanced and micro-reactors.

"We do see emerging demand from these various players and a multitude of them are actively approaching suppliers right now," Bryndza says.

"There is no HALEU market that exists today and there are multiple missing links before a viable supply chain can be established," she adds. As well as enrichment to higher levels, the HALEU fuel cycle will also have different requirements from today's low-enriched uranium (LEU) fuel cycle, including deconversion of enriched uranium hexafluoride into a variety of different forms, fabrication into fuel, and packaging, transport and used fuel management.

All of these are issues yet to be solved, but at the same time, UxC sees a clear demand for HALEU and advanced fuels coming from the global small, advanced and microreactor industry, and it is only a matter of time before a HALEU market is established, Bryndza says. But future HALEU supply must also fit into the existing LEU market.

"All HALEU users will depend on the same starting points in terms of natural uranium mining, UF6 conversion and LEU enrichment for feedstock. And then that LEU will get enriched to the HALEU level. So future SAMRs will be competing, in a sense, with the traditional LWRs for LEU supply … also they will be competing at the time when all front-end fuel cycle markets are extremely tight and have high prices.

"So the needs, so far, from these players have been small in relative volumes, but they are near term. This is not some kind of contracts far out in the future. And so this tightness around the end of this decade and the turn of the decade is really going to make that make that tightness even more pronounced."

The power of prices

UxC - by its own admission - is probably best known for its price reporting services. Dating back over three decades, the Ux U3O8 Price indicator is the longest-running weekly uranium price series. As well as being used by the industry in sales contracts, Ux Price indicators have been referenced by the US Government in the determination of price-tied quotas and for determination of prices in the highly enriched uranium deal between the US and Russian governments. They are also referenced in The Wall Street Journal, Bloomberg, Reuters, and other major media publications.

"Price reporting is something that we live and breathe at UxC," Bryndza says. "And the nuclear fuel markets have always been quite opaque. And at the same time, I find it very interesting to think about the wealth of price information that we have available today that we take for granted."

UxC started publishing spot uranium prices on a daily basis in 2021. Prices at three delivery locations, as well as a moving daily average price, are reported on a daily basis from Monday to Friday.

"It's really astounding to think that we are nearing the 40th anniversary of our UxC U3O8 Price becoming the first spot uranium price indicator to be issued on a weekly basis, which was an event that started to provide a lot greater transparency to the world nuclear fuel markets," Bryndza said. "Prior to March 1987, there was only a monthly spot uranium price. So just to think about this short history, it's quite astounding that we're able to have access to so much data."

As a speaker at the ¶¶Òõpro Annual Symposium in 2004, UxC owner Jeff Combs voiced his concern that traditional uranium price information at that time was insufficient to capture the future scarcity of uranium, Bryndza says. That year, UxC began publishing a long-term uranium indicator while also pushing for establishment of forward markets. In 2007, along with NYMEX (now CME), the company created the UX Uranium Futures Contract, a first-of-a-kind on- and off-exchange traded uranium futures product which uses the Ux U3O8 Price as its settlement price. 

"So we as a company, we at UxC really recognise the power of prices. We do recognise their effect on the markets and we take our responsibility very seriously. So the key is really to continue to evolve together with the market. We constantly evaluate and test new points of price data."

UxC's team approach to price reporting allows the company to reach as many market participants as possible, Bryndza explained, as well as enabling collective decision-making, which in turn makes its price reporting stronger.

"Most of the transactions, especially in the long-term market, they have unique features. And the market expects us to arrive at a single data point. And so arriving at this single number doesn't only involve using reliable, clear, predictable methodology. There's always a certain degree of judgment. So having a collective approach is key to ensuring that we deliver these indicators to the industry that are consistent and that are reliable."
 

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Episode credit:  Presented by Alex Hunt and Claire Maden. Co-produced and mixed by Pixelkisser Production
Cover Picture Credit: UxC

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