RE:don`t count them outI am not in agreement with Cantor Fitzgeralds forecast. It is apparent - and CF would agree I think...that it is the Russians and the Kazakhs that control this market. Here is why I think the price upswing will occur in late 2017 early 2018. Kazatomprom is setting up a Swiss Trading Arm in Spremnber of 2017. The whole purpose of that is to regulate the flow of Uranium from Kazakhstan onto the international spot market. Currentlyall of their output...or certainly the majority of it...is sold at spot prices. The Kazakhs want to see that price go up. Why? Well it is not for the reasons you think. The Kazakhs are privatising a number of state owned companies to generate cash. One of those is Kazatomprom. It is going to be publicly listed in London in 2018. That means the Kazakhs want a materially much higher price so that the value of that company increases.
So here is how I think it is going to play out. The Russians and Kazakhs will contin ue to dump underfeeding Uranium products (Russiand) and ISL mined Uranium into the spot market to drive as many companies out of business and close as many mines as they can before the Trading Arm is set up. Then - backed by Russian cash they will be buying and stockpiling spot Uranium at below production cost prices. That will create a shortage and set the US utilities particularly into a panic. mode. Prices of both spot and long term contract prices will then undergo a violent upswing as utilities scramble for available Uranium. The Kazakhs will then ever so slowly start to release their Uranium at very much higher prices and of course the value of Kazatomprom will increase accordingly. It will be sitting on 60% of the worlds U3O8 production and the Russians 60% of the worlds enrichment capability.
Saudi Arabia controlled the oil market at less than 12% of oil production Who do you think is going to control the worlds Uranium and enrichment markets.
The days of cheap Uranium are rapidly coming to an end. This is NOT supply and Demand at work - it is politics and influence. CF is using a supply and demand model and that is patently in error. The Russians control the supply. Do you think they will not want to poke the US Congress in the eye for putting on more sanctions? I think they will be only too pleased to do that. The US should be very careful here as they only supply a few percentage points of their Uranium supply domestically. The rest...well you guessed it...has been coming from Kazakhstan. They will not be able to call on the Canadians either since mosty of that supply is locked up supplying India and China. However the value of DML and the other Canadian mining companies will increase in lock step with the Uranium price....so the remainder of the summer is going to be a very good time to buy.
While I give great credit to the analysis done by CF it is based on supply and demand and the last two bull runs were psychologically driven not supply and demand driven.
So great work by CF but based on flawed assumptions.
We shall see who is right.
MAlcolm