RE:For many months now we have been lead to believe that at anyThings do not happen that quickly in the Uranium business. I have said many times here that I do not expect anything much to happen this year or next. The Uranium business is very opaque and convoluted and there are many facets of it at work. None of them move quickly. The key to this market is the pace of Japanese reactor restarts and the construction of new reactors. Japanese utilities do not need to contract for any uranium supplies - YET. There are nine reactors operating right now and to get to that number there have been innumerable court challenges. However there are 42 reactors in Japan that can operate (9 of which are operating leaving 33 to come back on line) and another 2 under construction. 5 have been approved by the Japanese regulator to restart. Fuel contracts must be signed about 2 to 3 years ahead of when the finished fuel is required and some times longer so Kansai Electric and Kyushu electric (that are operating most of the 9 now back in service) will likely be back in the contracting business about late 2020.
There are 55 new reactors (very large ones) under construction now and a large number of those will be starting to contract for initial fuel loads about now. Some of that material will be from the spot market which likely explains the steady increase we have seen this year - up about $10 from the lows of late 2017.
Looking at the total number of plants operating there are 453 plants operable of which 33 are Japanese plants that are not operating...ie burning Uranium. So the number of plants burning Uranium (all I care about) is 420.
So why 2020? That is when some (not all) Japanese utilities will start to enter contracting agreements again. It is also when new reactors will need to fuel their initial cores and surplusses are depleted to the point where the existing plants will need to contract also.
There is not enough mined Uranium to supply all of this demand. Mines never have produced all of the Uranium requirements of the worlds reactors and with large numbers of mines out of service (McArthur River, Langer Heinrich, Kaylakera, Rabbit Lake, Crowe Butte, Smith Ranch Highland to name just a few) where is it going to come from?
So while many talk of an imminent price rise that is unrealistic thinking in my view and patience is required to see it through to its inevitable conclusion.
Mike Alkin often says that catalysts are needed to spur the type of panic contracting we saw last time. I am of that view also. The threat of a supply shortage is certainly one that will prompt this type of buying.
It is possible that things may move this year or next but I do not see that happening. All of the bits of the puzzle are not yet in place...but they will be.
So be patient. These stocks are ridiculously cheap right now and I see no other opportunity out there as certain as this one. But will take more time yet.
Malcolm