I'm more inclined to agree with the following sentiment gleaned...

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voi dilettanti

676 Posts.

18/10/16

20:21

Post #: 19950110
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Originally posted by remirez ↑

http://seekingalpha.com/article/4011679-cameco-may-surge-aftermath-russia-scrapping-nuclear-deal

Summary

The Uranium market has been in decline for about a decade now. Russia's decision to pull out of the nuclear deal with the US could become turning point

1) Russia pulls out of nuclear disposal deal.
One of the main impediments to a reversal of this long uranium bear market has been the constant flow of secondary, non-mine sources of nuclear fuel into the market. By far one of the most important sources of this has been Russian re-processed weapons grade plutonium. A deal has been in place since 2000 between the US and Russia, meant to dispose of at least 34 tonnes of weapons grade Plutonium each. The US Plutonium has not been making it on to the market for various reasons, but the Russians have been burning the stuff in their nuclear reactors. Earlier this month Russia suspended the deal, citing deteriorating US-Russia relations, including what it perceives as a very hostile, anti Russian environment and actions. Russia suggested it is willing to reinstate the deal if certain conditions were met, including an end to sanctions, a withdrawal of US troops from countries not in NATO before the year 2000. This suggests that a significant improvement in relations would have to take place. I personally do not believe this will happen for many years to come, therefore this very significant secondary source of nuclear fuel is likely to stay off the market for a long time to come.

2) Current price does not support continued expansion of mined supply.
When it comes to mining of most resources, one will find that it is often the case that the price of the raw material may drop well bellow the breakeven cost of production. In the short term such situations will occur, but in the long term there is always a re-balancing to a price level that is somewhere above the breakeven production price. In the case of Uranium, we are currently in the situation where over half of all global mine production is not profitable at current spot prices. I should mention that uranium generally tends to be sold in bilateral long term contract deals where the price tends to be higher, but still, the current price mix is not adequate to support continued production expansion.

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I'm more inclined to agree with the following sentiment gleaned from within the very same article (particularly the bit where he says, "I obviously cannot predict when the market will turn..."):
"The price of Uranium was lower than this before the price surged, as we can see from the chart. I do think that there is still more room for uranium prices to decline before it bottoms, but I also believe that a bottom is not too far away now. I obviously cannot predict when the market will turn with pin point accuracy, but I do see many signs which suggest that it is likely to happen soon. The three main reasons happen to include two recent developments which happened this month, which are likely to affect the longer term supply/demand outlook."
I've heard it all before. Ho Hum.
Every "expert" has been 'seeing the signs' since day dot, ONE of them will be right ONE day!
IMO The Dragon will get us for a song.

PDN Price at posting: 16.0¢ Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

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