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#uranium #thread Just got off the phone to a friend in the sector. Gave him my view on uranium in 2020 among other things that I wont discuss on here. Thought I would share. Ties into the 4 things to focus on & the rest is all noise tweet a few days back. 2020 was supposed to be
2) another dull inventory drawdown year. Remember telling Pelchat back at the beginning of 2020 to go back to sleep & see you in a year. Utilities were not in the mindset to begin real LT contracting. Covid has been a wildcard in the sector. Has moved forward inventory drawdown
3) by at least 6 months and has raised some eyebrows with utilities on primary supply. It has also crippled the carry trade (with some help from Cameco and Kazatomprom). The carry trade was to be a thorn in their side in 2021+ as LT contracts began to roll off globally. It could
4) potentially have legged the status quo out for another year or two if done in volume. To simplify, contracting is done in three ways, the spot market (0-12 months), the carry trade (mid term), or long term which is normally done through producers. It will be a huge benefit to
5) producers if volumes available are low in spot & the carry trade as LT contracts roll off. The other potential hole in the #uranium bull thesis is mobile inventories. Have spoken to many in the sector on this and almost all numbers are within a 20 mil. lbs window. That is a
6) very small window or margin of error. So circling back, your #uranium bets are on when utilities contract LT in volume. 2020 is not the year. But 2020 (H2) will determine if the carry trade has been crippled or left for dead. This will be an important domino that needs to fall
7) for LT contracting in volumes to occur. The last year plus we have seen no volume selling in the spot market to drop the price all the way up to $33 (which is presently holding). We are chewing through quite a bit of mobile inventory this year. Cigar & Kazakh production will
8) very likely come back online to precovid production later on this year and the price of spot uranium will drop based on psychology short term. This would be the opportunity to test the "plenty of mobile inventory thesis" as at that time, it would play out if there was. There
9) are a couple of other things to watch but 2020 will be a very important year for the #uranium bull thesis. Will get a chance to test the "death of the carry trader" thesis as well test the "plenty of inventory out there thesis". This needs to be done before LT contracting can
really occur. There is way too much noise out there in the #uranium world. Focus on what really matters.
11) One last thing to remember. Utility buyers don't purchase uranium on an epiphany or on the advice from urantwit. They purchased based on needs & spend big money to subscribe to UXC for advice. Like the utility buyers, it is not in the interest of UxC to be early on this.
12) We are in a transition period. Even UxC has been changing their tune. But they have yet to give the green light or a "pounding the table buy" message to the utilities. This is who they pay for advice as when to buy like it or not. But as a uranium bull we are getting closer
