Long-term contracting on the upswing Uranium Investing News has a good report out this morning on the resurgence of long-term contracting in uranium markets - an interview with David Talbot of Dundee Capital Markets. It has some good basic information on how long-term contracting operates. One of the most interesting points is his view that the recent upturn in uranium markets is NOT being driven primarily by news on Japanese reactor starts, but by an upturn in long-term contracting. (It also mentions a similar conclusion by David Sadowski of Raymond James.)
Excerpt:
Talbot said a large amount of contracts with spans ranging from seven to 10 years were signed in the 2006 to 2007 cycle. With that time range set to expire in the next few years, utilities companies are on the hunt for a steady, secure source of uranium.
“Setting a long-term contract provides stability for companies,” he said. “I expect seeing uranium prices rising … because all of [these companies] are going to need uranium at the same time.”
In 2007, about 92 percent of all uranium was sold in long-term contracts, according to Talbot. He added a warning that half of the United States’ required uranium hasn’t been secured for 2016 to 2018, meaning the push is on to secure uranium....
Similarly, in a research note to clients, David Sadowski, an analyst with Raymond James, said, ”[t]his move is likely a result not of the restart approvals, but rather a resurgence in nuclear utility buying interest — we are hearing that several utilities are in the market looking for supply.”
Given those comments the lens is sure to be once again focused on long-term contracts moving forward.
Link: https://uraniuminvestingnews.com/20019/long-term-contracts-urenergy-usa-japan-fukushima.html