Macro Voices MacroVoices #444 Mike Alkin: Uranium Fundamentals Couldn’t Be Better
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Sep 5, 2024 Join Mike Alkin, CIO of Sachem Cove Partners and expert in uranium market analysis, as he dives into the intricacies of the uranium market. He discusses the unique challenges utility companies face, the complacency in supply signals, and the impact of geopolitical events on pricing. Alkin reveals how production cuts by major players like Kazatomprom are reshaping global dynamics. With insights on long-term versus spot trading vulnerabilities, this conversation uncovers why understanding the uranium sector is more crucial now than ever.
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Nuclear Fuel Buying
- Utilities buy unrefined uranium and contract conversion and enrichment services separately.
- This is because they prioritize security of supply and want to control each step of the complex nuclear fuel cycle.
Spot Market Manipulation
- The uranium spot market is vulnerable to manipulation due to low trading volume and the pricing mechanism.
- Traders can influence month-end closing prices, impacting contract benchmarks, even though spot trading represents a small portion of the overall market.
Illiquid Futures Market
- The lack of a liquid futures market for uranium is due to the small contract sizes and the utilities’ preference for long-term contracts.
- This makes it harder for speculators and hedgers to participate, leaving price discovery primarily to the physical market.