Price discovery coming (maybe quite soon)This is quite the time for uranium markets even though price hasn't moved much – yet. .There are a number of reasons why that might change quite soon.
-the distractions of covid has focused utilities away from negotiating long term contracts.
-Mine shutdowns causing the big 2 to buy in the spot market or sell out of stockpiles.
-Signing of the RSA was holding back commitment by US Utilities but now done with visible clarity.
- Also a comintment to buy uranium for a national stockpile by the US Government
-China confirming in the new 5 year plan that they plan to continue to build multiple reactors per year.
-2 mines reaching end of life (Ranger and another one) soon and I believe that’s more that 5% - 7% of the world supply.
- a growing realization that nuclear is carbon free base load which gives it a big leg up on solar and wind.
- the shinking of mobile inventory for spot.
-Other things I can’t think of right now.
Any contracts negotiated now would be for the 2023 period and beyond. Red Cloud securities predicts a 22% supply imbalance in the uranium market by then. The imbalance just gets worse after that. This is well known based on what reactors are in place and those that will be commissioned.
The utilities are playing musical chairs. Last one to sit down (negotiate) won’t find a chair to sit on. They need uranium like a human needs air. There is no alternative.
By this time next year - when the logjam breaks) Uranium could easily be at least $85 (the price in 2011 when markets were balanced). I think Cameco would be fools to settle for anything less.