The Energy Report
Source: Streetwise Reports> 11/13/2017
Rob Chang, an analyst with Cantor Fitzgerald, discussed how one uranium company’s upcoming facility closures should affect the market.
Cameco Corp. (CCO:TSX; CCJ:NYSE) intends to halt uranium production at its McArthur River and Key Lake operations for 10 months beginning in February 2018, Chang reported in a Nov. 8 research note.
He indicated this “major production cut” will drop total estimated 2018 uranium production by about 9%, which equals about 13.7 Mlb.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
As for the overall effect this could have on the market, Chang concluded, “We expect strength in uranium prices and equities on the back of this news. This is the type of supply shock that will spur strength in the spot U3O8 price as a significant amount of expected production for 2018 is removed.”
The analyst qualified those statements, however, noting the change may be slow to take effect for three primary reasons:
1. The market is “less efficient” due to the limited number of existing, qualified uranium purchasers today, Chang wrote.
2. Utilities are not under pressure to buy uranium soon, the analyst noted. They have “shored up what were once large shortages through spot purchases or short contracts,” leaving an estimated under 10% of total uranium demand for 2018 and 2019 “uncovered.”
3. Current inventory levels could “dampen” the expected price movement, said Chang. “We estimate that there are 8001,200 Mlb of total above-ground inventory of which about 700800 Mlb are held by utilities.” However, not all of that supply is available for purchase, as significant portions are held for strategic purposes and necessary utility needs.”
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
( Companies Mentioned: CCO:TSX; CCJ:NYSE,