RE:RE:Thoughts on next week?Looked at the issue some time ago...
My thoughts - short answer Government run mining companies - i.e Russia, Kazaks, etc longer answer - in other words non free market entities. They don't care if they make profits, they don't care about shareholders, they will run their mines at a loss and make up the difference from their income bases i.e. taxes, printing rubles, etc. They run their mines at any cost and keep the workers employed. Hold over from the communist days thinking. By the way even Areva of France is heavily subsidized by their governement, maybe they should be bankrupted right now if not being government supported by an injection of 5B Euros or so. China bought into Husab and will likely run it at a loss as well, just print more Yen.
Years ago the spot market was described as being small, most transactions occurred in the longer term contract market. I watched spot sales over the last couple of years and that didn't add up to me, even though major heavily subscribed analysts were still claiming the spot market a s tiny. I estimated about 55M lbs being transacted in the spot market which is about 1/3rd of annual production - that is not small or tiny.
The state run entities don't get basic economics regarding making a profit. Cates said lately that they were starting to understand when they announced the 10% cut in Kazakstan and he also identified that the spot is at an annual 50Mlbs market.
So the glut continues for a while longer - what will happen if it does is that we will see the rational miners, those understanding the economic profit thesis will curtail production further . i.e Cameco, EFR, UEX, Paladin, etc, ( if Paladin even exists in a few months).
If I was UPC and CCO, I'd be buying as much yellowcake as I can at the spot and stockpiling.
Our hope ... that the ANALysts are correct and a big growth in demand will materialize - soon.
staying long - just in case...
GLTA - B2S2