URANIUM CONVERSION AND ENRICHMENT MARKETS

During the first half of the reporting period, the price for conversion continued its decline which began in 2011, which is due to the surplus production facilities and presence of significant nuclear fuel reserves in various forms that resulted in excess of conversion and enrichment services over the current demand in the market. In recent years because of the current market conditions most suppliers of conversion and enrichment services do not use their production capacity to the full, and tend to reduce the volume of output or suspend the production completely.

The lowest SWU (separative work unit) price indicators on the spot market – USD 34 per SWU – were recorded in the middle of 2018, then for the first time since 2010, their growth began. By the end of 2018, the SWU spot market price returned to the level of the end of 2017 – USD 39 per SWU*.

* Data obtained from UxC.

MARKET OUTLOOK FOR FRONT END NUCLEAR FUEL CYCLE

Front end nuclear fuel cycle market outlook depends on the current state of the reactor fleet and periods of its operation, plans for construction of new units, as well as the reserves of FE NFC accumulated by various market players. According to different scenarios in 2030 outlook, the nominal capacity of the global reactor fleet will increase, the difference is in growth rate.

The Asian region remains the most promising market where the main construction of new units is in progress and there are serious plans to build up the nuclear facilities. The demand is expected to reduce in FE NFC markets of Europe and North America due to ageing of the reactor fleet, decommissioning of the existing facilities and small quantity of new projects aimed at replacement of the retired facilities.

TVEL Fuel Company is one of the global leaders in nuclear fuel production.

TVEL Fuel Company is the main supplier of fuel for reactors of Russian design, as well as it is sufficiently competent to produce nuclear fuel for PWR and BWR reactors and its components from reprocessed uranium (in cooperation with Framatome), and pellets for BWR and PHWR reactors. TVEL Fuel Company elaborated its own in-house design of fuel assemblies (FA) for PWR reactors - TVS-K fuel, which is under the pilot operation.

TVEL Fuel Company jointly with TENEX JSC provides more than 1/3 of the needs in uranium enrichment services.

In 2018, the Company continued to work in difficult external conditions, facing a number of new challenges. The nuclear power industry in the world developed at a slower pace compared to previously made forecasts. Facilities surplus and low prices in the NFC markets remained. In foreign markets the Company had to deal with not always market-based instruments of competitive struggle, expanded protectionism tools.

The initiatives undertaken by TVEL JSC on improvement of technical and economic features of fuel, development of new samples of fuel, including accident-tolerant, make the Company’s products more attractive for its customers both on the traditional fuel market for Russian-design reactors, and on the fuel market of Western-design PWR reactors.