Self-Sanctioning Creates Market Vulnerabilities

The ongoing war in Ukraine has prompted individuals and companies to self-sanction against Russian entities, coinciding with existing Russian bans in the U.S. This situation has led to a surge in demand for uranium enrichment and conversion capacity, highlighting previous underinvestment in these areas similar to the post-Fukushima period. With fewer uranium enrichers and converters compared to miners, a hierarchy emerges in resource allocation. The market dynamics indicate a significant increase in uranium prices, illustrating the influence that fuel buyers have over the market. Moreover, the trading landscape reveals that 85% of transactions occur in long-term contracts, leaving only 15% in the spot market, potentially exposing it to manipulation, particularly at month-end close, raising concerns about market integrity.