Afternoon Guys, I think that we have seen the bottom in Spot U...

Afternoon Guys,

I think that we have seen the bottom in Spot U prices back in late 2016.

What has followed has been a confused bottoming process and stealth recovery, punctuated by both positive and negative periods/ events that have created noise in what is otherwise a higher trending Spot Price.

(1) In late 2016 Kazatomprom announced production cuts which caused the U price to surge (and miners) and marked the bottom in the Spot U market at c. $18 lb.

(2) Soon thereafter the market called BS on Kazatomprom and the Spot Price reverted

(3) In late 2017 CCJ announced the closure (for 10 months) of McArthur River causing the second surge in U prices

(4) Soon thereafter, 2 US domiciled U miners filed a S232 petition which immediately caused US utilities to cease buying U and thus caused the second price reversion.

(5) Last month we had confirmation that LHM would be suspended, taking more U from the market.

(6) In recent weeks confirmation was received that Kazatomprom did indeed cut 2017 production (only by 5.5% however) and are initiating further cuts for 2018 forward.

(7) We can see that the U price is now moving upwards again, and ever since the low in late 2016 the price has moved + 27.5% (from $18 --> $22.95) ... still far too low for mines to reopen and thus as this trend gets established and the narrative changes this should further improve.

This is especially so as new/ existing non-utility players enter the Spot market (Yellowcake, CCJ, UPC). Participants are now watching for:

(a) LT McArthur River shutdown or Cigar Lake suspension decision
(b) Japanese restarts accelerating
(c) Additional SPV's to enter spot market (Tribeca, L2 Capital, Collins Street, UPC, Yellowcake)
(d) Initial buying by CCJ in the spot market which is slated for 2H 2018
(e) Outcome of S232 petition
(f) Return of US utilities to the market subsequent to resolution of (e)
(g) Potential suspension of Ranger and Rossing as their higher priced contracts roll off (soon)
(h) Continued EM market reactor construction programmes and completions




My opinion is, just as analysts are despairing and think there will be low U prices far into the future, the turn has been made and it will accelerate a lot faster and harder than any broker analyst could anticipate.

Cheers
John