Flash Note: Spot Uranium Volatility
The big news over the past several trading sessions has been the rather large volatility witnessed in the spot market over the past couple of sessions. As always, we want to put these moves in context and put forth some ideas around what we think is going on.
On June 25th, we raised some views around the US$200M SPUT raise in our 60-Day Review & Big SPUT Raise. As a reminder, the big takeaways were as follows:
On such a large capital raise, SPUT cannot predict how the market will react and as a result, “it is a bit of a balancing act raising large amounts of capital in a short period of time. On one hand, it makes sense to deploy the capital relatively quickly around the level of spot prices at the time of the capital raise. On the other, they don’t want to bid the market too fast only to see the market relapse lower once the surge of demand has dried up.”
“…there is no doubt they are trying to play some poker with other physical participants by shifting gears from day to day by staying out of the market one day and perhaps buying different amounts another. The purpose is to let the spot market continue to function allowing for buyers and sellers to trade all the while everyone knows how much capital SPUT has left to deploy.”