BULLISH:Good News coming on Uranium9 May 2017 12:25
Although the market has been focused on Japanese reactor restart process, focus should really be on the potential reduction of spot uranium prices in 2017 and beyond.
A few companies and for Kazakhstan, the Government entity Kazatomprom, have announced that they will be removing uranium production that is sold at spot price in 2017. In the case of UR-Energy and Peninsula, these companies are buying uranium at the spot market to deliver into their long-term higher priced contracts, thereby saving their in-situ uranium resources.
Paladin recently announced that it will hold a conference call on May 17th to update the market on the Langer Heinrich discussions with CNNC. Langer Heinrich is 25% owned by CNNC, 75% owned by Paladin, and produces about 4 million lbs of uranium per annum which is sold into the spot market. If CNNC is a successful buyer of the remaining 75% of Langer Heinrich, this would take another 3 million lbs of uranium out of the spot market.
About 12 million lbs of uranium coming out of the market this year, or about 8% of the world’s production. This could be VERY BULLISH for the spot price of uranium in 2017.
The wild card in H2 2017 is coming from Kazatomprom. The company is setting up a Swiss trading arm to buy uranium at spot prices and sell at term prices in order to close the $10 gap between the spot price and term price. As an IPO is believed to be in the minds of Kazatomprom in order to bring more hard currency into Kazakhstan, it is in the best interests of Kazatomprom to see the price of uranium much higher. This is similar to how Saudi Arabia views the price of oil as the Saudi’s prepare for the listing of Saudi Aramco in 2018.
Link to the Kazatomprom listing article is here: www.bloomberg.com/news/articles/2017-05-02/opec-teaches-world-s-top-uranium-miner-how-to-handle-price-crash
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