I think this bear scenario for U stocks is the correct one, fukushima will damage the industry for almost a decade similar to 3 mile and chernobyl, and with this i will back off posting so much because nothing will change here anytime soon other than an occasional trade and anymore will seem like bashing, this is why i sold almost all of my U stocks mid 2012, and i have yet to see a reason to heavily commit again.
And btw post a bull case from someone who doesn;t have skin in the game and will not profit from it, hard to find, Seeking alpha(no), R Chang (no), D sadowski(no), Motley fool(no), they all admit they hold shares or trade in and out of U stocks, GLTA from a huge bull who is now a huge bear
The recovery will not, however, be long lasting under CIMB's modelling. Despite recent voluntary cuts to supply, including Paladin Energy's Kayelekeera mine in Malawi being placed into care & maintenance, and despite the end of the Russian HEU supply agreement, CIMB sees the global uranium market drifting back in to surplus by 2016. The analysts forecast a compound annual growth rate of supply of 2.5% in 2012-22, with increases driven by Kazakh mines reaching production capacity, Cameco's Cigar Lake ramping up in Canada and the construction of new projects in Namibia.
In the meantime, UBS is the most recent of brokers to mark uranium prices to market for the purpose of producer valuations. The broker has cut its 2014 average price forecast to US$39/lb from US$43/lb previously.
There may be some supply anxiety among utilities, but there appears to be no sense of urgency just yet. Meanwhile with the price of uranium trading below the average global cost of production, sellers remain desperate to generate cash. At least one big seller was actively seeking buyers last week, TradeTech reports. Five transactions totalling 500,000lbs of U3O8 equivalent were conducted in the spot market last week, and by week's end the price had fallen as low as levels not seen since November 2005.
There were no transactions conducted in the term market. TradeTech's term price indicators remain at US$37/lb (mid) and US$45/lb (long).
The industry gathered in San Francisco last week for the annual World Nuclear Fuel Cycle conference. While the mood was understandably solemn, TradeTech notes, given uranium price weakness, there was optimism that the nuclear power industry's current situation will eventually improve in the long term.
CIMB believes the spot uranium market will begin to tighten over the next couple of years. CIMB analysts have modelled global mine supply and nuclear demand from the bottom up.
They forecast global nuclear power capacity to increase at a compound annual growth rate of 2.0% from 2012 to 2022. The analysts are sceptical that China can actually achieve its ambitious goal of 58GW of nuclear power generation by 2020, but believe Chinese nuclear capacity will triple by that time nonetheless. They also assume the restart of Japan's west coast reactors over the next four years.
CIMB is forecasting a recovery in the spot uranium price to US$47.50/lb by end-2015. The recovery will be tempered by the extent of existing global inventories, the analysts admit, but price sentiment should improve on a recovery in the term contract market.
Seventeen of Japan's 48 idled reactors have filed for restart approval and it was hoped the first of these, Units 1 and 2 and Sendai in southern Japan, would be ready by June 30 to cope with the summer electricity demand surge. However even if operator Kyushu Electric has received government endorsement and regulatory safety approval, it still needs approval from both the provincial and local governments, hence several meetings are now to be held. Uranium industry consultant TradeTech thus believes the first restart is likely to occur later in the year.
The uranium industry has been waiting for news of the first Japanese restart ever since an Abe government was seen as inevitable late in 2012. Progress has been glacial and anti-nuclear protest has been powerful but in theory, here we are. The first reactor may not start till later this year but it is assumed restarts will then flow one after the other, and markets pre-empt such milestones rather than wait for them to actually happen. For two years industry analysts have been suggesting that once Japan's nuclear future is restored, the uranium price must finally recover.
The other developing factor threatening to impact on uranium demand is that of the escalating Ukraine-Russia conflict. Were the West to step up its sanctions against Russia to a more meaningful level this could well include a ban on imported Russian enriched uranium, leaving a big hole in global supply of enriched reactor fuel. This threat is provoking US utilities to consider pre-purchasing supplies in case the sanctions come to be.
The scene is thus set for a realistic bounce in the spot uranium price from its eight-year lows. But what did the spot price do last week? It fell US50c to US$33.25/lb on TradeTech's weekly spot price indicator.
You nailed it, CCJ's ceo was asked that very question, he estimated 6 to 7 years of U on hand for the Japanese, which means they are a non-factor in spurring demand and probably a negative whenever their contracts wind down over the next few years, and btw he said 4 years was about the norm
I think you are correct, the only thing that will turn this around is a supply disruption, just as Fukushima was a demand disruption, pinning our hopes on a few Japanese turn-ons will not do it, for the reasons you outlined before, otherwise the U market is in, and will be in oversupply for quite awhile longer, and once again i am not bashing U stocks
And i really hate to pile on, but mid and term fell about 10% last week according to TradeTech and UXC to $37 for mid and $45 for term, spot is a small part of the market but if mid and term falls, no one will be able to sell U at a profit, which believe it or not will increase the supply crunch down the road, because who can operate at a loss? and for how long? all marginal and unprofitable operations will be suspended if this doesn't change soon, and because of this possibility i would invest in only the ones with the strongest balance sheets for now, until the price of U stabilizes
Really investigate the supply versus the demand equation, there is nothing that will move the spot, mid or term price higher, the reasons below are hype and always have been
Japan (no) only if they turned back on all or most, which they won't
HEU to LEU ending (no)
China (not right now, and they are stocking up right now in anticipation of their new builds coming on line), some say that by over buying they are supporting the spot market right now and if they slow down the spot price could collapse
The supply shortfall is building, but its going to take some time (maybe another 2 years), CCJ pays a dividend which is good, so you get paid while you wait, but most of the others are trades, because the parabolic spike everyone is waiting on, is some time off
However there is always the unforeseen that can turn a market on a dime, don't know what that maybe, but it won't be any of the ones listed, not now anyways, if anyone knows please tell me
The WNA says supply is adequate until the 2016 time
frame other sources say beyond that, REALLY, REALLY look into it and you will probably draw the same conclusions
However do not think the falling price will do that much damage because the info i posted is pretty much known and priced in by the pros, this year looks about the same as last, great promise the first 3 months and tread water the rest of the year with a few minor rallies during the year only to give back gains
Been in and out of U stocks over the last 10 years so i really hate to be so negative, hope i am wrong, but we will see
This is the biggest and best white swan you will ever find, and why i follow these stocks, much maligned but needed energy source, that has been subjected to so much fear mongering by the uninformed press.corps, but in the end, the ruling class all over the world will choose it because it has its place, and while i may post negative things sometimes, i know what they know, now so do you, enjoy this long suffering U stock holders
New UN Report Released This Week Supports Nuclear Energy
By John Licata | More Articles | Save For Later
April 5, 2014 | Comments (0)
No increased cancer risk from Fukushima. That was the finding by the United Nations Scientific Committee on the Effects of Atomic Radiation in a report titled "Levels and effects of radiation exposure due to the nuclear accident after the 2011 great east-Japan earthquake and tsunami."
While many scientists and government officials were digesting the UN's earlier IPCC report on the growing need to combat climate change, the new report on radiation post-Fukushima came in rather quietly. Word about no discernible changes in the rates of cancer and other diseases after the Fukushima nuclear tragedy is welcome news to the uranium mining sector, which has seen the price of spot uranium firm up at around $34 per pound. Also, valuations of mining stocks have methodically moved higher since the start of the year. I expect this to continue on the heels of the IPCC report's major global call for lower carbon levels in order to reverse negative impacts of climate change. Therefore, I continue to favor Energy Fuels (NYSEMKT: UUUU ) , Denison Mines (NYSEMKT: DNN ) , and Cameco (NYSE: CCJ ) .
And they did not just guess on a number, they went plant by plant to come up with that or those numbers, on which ones would probably come back on-line and which ones would not, check it out for yourself
There are some out there, Germany sort of re-thinking energy plans, China moving full steam ahead, and at least Japan starting to turn on some reactors some time this year, although a Rueters article yesterday, or go to the Japan Times yesterday, estimated that only 1/3 to 2/3rd's of the 54 down will ever be switched back on over the next few years, which is probably a grey swan, and will not be the major driver we all hoped for, with the stockpile of U they have, they will be a non-factor in helping lift U prices for at least the next 2 years or so, so i am not now, nor have been totally negative this sector, but the hype is pure non-sense.
King i see we are on the same page when it comes to U stocks, but remember only happy talk is allowed, otherwise you are a basher, in 2012 when i sold almost all of my U stocks and turned mostly negative , i have seen only glimmers of light since then, that were quickly turned off by reality, so i for one will give you thumbs up for your facts, whether we want to hear it or not
Agreed, i thought this would be the breakout year, however, after also investigating and uncovering the FACTS you mention, not so sure any more, however i think dnn will survive and prosper one day, but i think there's more pain to come also, lots of rosy articles lately concerning the U market, but almost all have skin in the game and trade in and out of these stocks, like seeking alpha et al
Hate to be so negative but here are more FACTS, all of the U mines that are being put on care and maintenance can easily be ramped up if the spot price spikes up, (UEC is a prime example, read their comments) which will further limit how high it can rise for the foreseeable future, and then there's is always Kstan, who no matter what the market conditions may be, just keep on pumping it out
Still positive U stocks "long term" as they say, 12 to 18 months out, however i said that 12 to 18 months ago and 1 year i will be right
Any opinions of what the impact maybe on U stocks if the spot price dips below $34 which it looks like it could, its been in a range of $36 to $34 for about a year, $20lb looks like the next logical stop on the long term chart if it does not hold this range, nothing on the near term horizon to stop it, even if the Japanese turn on 5,6 or even 10 reactors before year end, they are stocked up with U and turning on a few will do little to spur spot demand in the near term, maybe next year, its the black swan no one is talking about that is a real possibility, so far it has been trending down with little impact on U stocks, but a total seller panic and a dramatic drop maybe another story.
here is only a portion of 1 article
TER: So do you think conditions in the market itself will materially improve? What will that look like?
DS: For us, it comes down to when the utilities start getting involved again. While the utilities have been sitting on the sidelines over the last couple of years, high-fiving each other for not buying uranium in a declining price environment, their uncovered requirements in the future have actually risen quite dramatically. At some point, they have to resume long-term contracting to cover all those needs. Japan is a key catalyst.
Japan’s reactors were slowly shut down after the Fukushima accident. Right now, none of them are operating. The country’s inventories have piled up to probably around 100 Mlb. Many of these utilities have asked their suppliers to delay deliveries of fresh uranium. That material ends up in the marketplace one way or another, so it’s having a price-dampening effect. In late February, however, the Japanese government announced its final-draft energy plan. Japan will restart at least some of its reactors to stop spending a ludicrous amount of money on imported fossil fuels. There are other economic and environmental benefits, but it’s the country’s trade balance that is really driving the restart push.
It’s these restarts that we think will spur global utilities outside Japan to resume buying. The signal will be sent that Japan won’t be dumping its inventories, it won’t be deferring deliveries anymore and, by the way, there is not enough supply to go around in just a few years so you better start contracting again. That’s what we think is going to support prices.
Let me add this for everyone to check into also, the Japanese had U delivery contracts that they kept in place over the last 3 years and took delivery of U even though all reactors have been down, they are well stocked up and will not create any stimulus in the U market this year, maybe next year if maybe 10 reactors are back online by the end of this year, many suspect that they were sellers into the spot market over the last 2 years, (remember the utilities have had and are continuing to have huge financial problems since the quake and tsunami) which kept downward pressure on the spot market price, so when the first few are back online do not be fooled happy days are here again right away, urre is a worthy U stock to bet on, but not a sure bet, .that will have ups and downs and more dilution down the road, which why i keep saying if you have a profit at any given time you should consider taking it
A lot of stuff is proprietary and u can't email or post or link anymore, however try and find out about M lynch's very recent downgrade of U prices in the short term (12 to 18 months), but still positive after 2016 and beyond, and i subscribe to about 6 or 7 free papers foreign and domestic that covers the U biz but yahoo will not let me post names, if i do this post will be erased, however they are out there u just have to look
U stocks are behaving the same as they did last year, strong first 3 months of the year, then sink the rest of the year with 1 or 2 rallies during the year, watch CCJ its the leader and its starting to give up its gains, next month will probably set the tone for the entire year
After reading a couple of articles on the U biz today, your price projections could be more accurate than mine
I would buy down here and hold until Japan turns on the first or a few reactors by this summer, should be a head fake rally which i would sell into, because the Japanese are fully stocked with U and turning on a few rectors will do nothing to stimulate current demand, so do not be fooled and take your profits when u get them, buy at this level and they will come soon, but remember the burning match proverb
"A match burns bright once lit, but if you hold it too long it will burn you"
They won"t go anywhere but to the bank with shareholders $, just wait and see, if they did it 3 times so far, who will stop them the 4th time, however i am waiting until the U market recovers enough and eventually even the sludge will rise to the top, it will float for a while and sink to the bottom AGAIN