RBC's Uranium Report - April 3, 2018Here's a clip from the most recent RBC report:
We think there are several potential supply-side developments that could be incrementally positive– 1) Further production cuts in Kazakhstan: We view recent curtailment decisions as indication that Kazatomprom may have a desire to further rein in excess production that has contributed to the current market over-supply; 2) McArthur River start-up timing: We currently assume McArthur production re-starts mid-2018, but the decision is likely contingent on better uranium prices and our current forecasted price may not be high enough to justify re-start; 3) US Government inventory sales: The US Government has suspended uranium inventory sales for the remainder of 2018 and could potentially suspend the program going forward – we have only included the 2018 suspension in our S&D model.
So even the 'experts' that cover this sector and provide price modelling also admit that their price forecasts are based on inaccurate and somewhat ridiculous assumptions. Why in the heck would Cameco restart McArthur if prices haven't substantially increased after 10 months of being offline? It makes absolutely no sense. Am I the only one who thinks that building price forecasts on stupid inputs is careless? Is this what the rest of the market thinks…that Cameco’s just going to bring production back online and run their operations as per usual, regardless of the commodity price movement?
WAKE UP PEOPLE! USE YOUR BRAINS AND THINK!