I listened to Cameco's Q1 conference call last night, directly following that I listened to a pocast from some big names in the U space as to what they inferred from the conference call.
You can listen to Cameco's Q1 conferene call here. (it will ask for details, for company name just state "self")
On asked about who is buying in the spot market, the CFO stated:
Grant Isaac -- Senior Vice-President and Chief Financial Officer: Yeah, sure. It's rather a broad-based demand that we're seeing in the spot market, which explains why it's been a steady inflationary trend that has now withstood, I would say two normal month-end game playing that can sometimes go on in our industry. Both March month-end and April month-end have now come and gone without taking any trajectory off that spot demand. It's of course producers and we're among them that are looking to cover their committed sales in the face of both planned and unplanned supply discipline.
We've seen some utility purchase. I wouldn't say it's the dominant part of the spot market. I think it's important to understand that our customers are not free of concerns about COVID and are focused on their own pandemic planning right now, but we have seen some utility demand in the spot market for sure. We've seen some financials with the growing interest in the market.
And I think the other theme is we're seeing sellers retreat. You've heard us say before that historically in our market, willingness to sell or the mobility of material tends to be inversely related to the price and when the price goes up, we see folks less willing to part with material.
So this steady broad-based inflation in the spot market, we expect to continue. You know that our goal has been to buy material very strategically in the product form we want, in the locations we want, and quite frankly, in the timeframe that we want.
And you heard us say at Q4, you also heard us say throughout 2019 that we were not finding a very deep market when it came to pounds that were in a can or in a canister and available today and I think what this market transition is showing is that's true.
Tim Gitzel:
Inventories, which have been blamed for low prices in our industry will come into greater focus as a result of the unplanned supply disruptions. Some utilities may have to rely on their own nuclear fuel inventories as a result of the disruptions to production and we may see an acceleration of the destocking that was already under way in our industry. For years, we've been hearing about the large inventories of uranium. We'll now get a sense for the mobility of these inventories.
The Podcast participants I listened to were extremely bullish towards uranium and the spot price.
- of the firm belief that the U market is now shifting and transitioning "before our eyes".
- shifting from a buyer's market to a seller's market.
- historically, the U spot price has been beat down at the end of each month as traders lock in a lower price for their carry trades (closing price at the end of each month was the price used for their carry trades), this has not occured for the past 2 months. They stated the carry trade is effectively dead. (no data either way but if "intermediares" do have uncovered positions there may now be an urgency to go the spot market which would create more upward pressure on the price)
Grant Issac: It's not clear to me where traders are going to get material from in order to continue with that mid-term business. And to the extent that the financial interest that have funded that carry trade in the past don't have the liquidity that they're willing to put at risk in the carry trade. Well, that's going to impair it as well.
So then you could see the opening up of more classic term demand, as we know it in our industry, which would be a very helpful development, because of course traders can't offer that term material. They are not producers. They can't offer the long-term security of supply. They don't have a production base. They're just borrowing from the market, if you will.
If the podcast becomes available I'll post the link.
Closing prices for Cameco Corp was $14.42 CAD +0.58 (4.19%) on Toronto Exchange and 10.29 USD +0.33 (3.31%) Up 3.3% on the NYSE.
Macro is looking better by the day, I don't think any of it helps PEN in the short term, there are still some hurdles for us to overcome, but the improving outlook for the financials of Uranium should see some capital come back into the sector and may open up other opportunities.
(20min delay)