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Antony Rouse's avatar

Thank you. Great piece. You have explained these pricing dynamics, which are difficult to learn from scratch, very well. (Context: I have been long the sector for a couple of years now.)

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Golden Rock Research's avatar

Always appreciate the feedback and comments Antony!

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Sauli Sainio's avatar

What kind of amount of reported long term contracts by uxc would you consider as replacement rate contracting, as a percent of total annual demand look like roughly? Besides a small amount procured from spot market by utilities, how many contrats will go unreported? Then, we have a very significant amount of production that is sovereign owned and supply their own and export reactors. Would Rosatom report (or even make a contract) for their production from Russia and joint ventures in Kazakhstan for their own reactors? How about CGN/CNNC for their owned production and Orano for the part of production they supply to EDF?

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Golden Rock Research's avatar

We think the concept or notion around replacement rate contracting is flawed. The narrative is, once replacement rate starts to happen, term prices will move up meaningfully. And while we agree that would likely be the case, we do not believe suppliers can even offer the amount of pounds in any given year to equal reactor consumption at $80 base escalated term or market-related at 70/130 floors and ceilings. Why? We don't think there is enough supply capacity right now at these prices. We are working on a piece about this as we are laying out what we believe are available capacities (vs. what has been signed already).

You make relevant points about state-owned entities. For example, we're sure there are internal price transfers at CGN and CNNC but we don't think they're reporting an actual contract price to UxC/TT. Same with the Russians who have their JVs in Kazakhstan. Is Orano reporting volumes sold to EDF, they could be. For us, this why were focus so much on building and maintaining a supply model vs. reactor consumption as it will account for the Chinese, Russians, and French "internal" transactions.

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Clement Bret's avatar

Brillant dive in!

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