RE:RE:U3O8 Inventory Estimates from Nuclear Fuel AssociatesIt is not reasonable to think there is just one player or Government involved although you make a valid point. I think it is a combination of many factors. Underfeeding of enrichment plants is most definitely one of those factors for all the reasons I have mentioned in earlier posts. I think it is underfeeding that has set the floor price for Uranium.
The key point from Quakes is that the underfeeding supply has dropped in half. The reason is that enrichers make their money from orders from plant operators so if they can keep their plants operating to actually enrich fuels as they would normally do then they going to choose the higher profit margin option rather than underfeeding. So what we are seeing is enrichers using their centrifuges to supply reactors with fuel and stopping their supply of underfed Uranium into the spot market. That is a direct result of Japanese plants coming back on line and the start up of many new reactors. In short demand for enriched fuel is increasing therefore no need to underfeed.
I am sure the Kazakhs had something to do with this also. Lulling the US industry into a false sense of security would seem a suitable political move by some parties. In that I think they have been very successful and without a doubt is going to start the panic buying we saw in the last bull market....driven largely by US utilities.
So with underfeeding spot supply fast drying up, demand from miners like CCO using spot to supply their contracts and companies like Paladin who sell mostly to spot suspending mining and refining operations I do not think there will be very much material left to sell onto the spot market. That will force utilities into term buying...and those contracts will be at much higher prices. Suppliers will want to cover the heavy costs they have incurred in this downturn and money muct be found to restart all the closed Uranium mines as well as to incent new ones to be built. Those contracts are going to be well over $100/lb...miners will make them pay for the pain they have been caused and to cover all the expenses of shutting down and restarting mines. All that money must come from the sale of U3O8 in the long run.
Interesting points. There has been some deliberate manipulation I am sure but there are many other factors here which have affected spot price but are fading away this year.
Regards
Malcolm