Uranium Prices Drop As Analysts Set New Market Expectations, Major Producers Issue Warnings

Author: Stjepan Kalinic | March 22, 2024 12:41pm

After a relentless bullish run that took Uranium prices to levels not seen since the Fukushima disaster in 2011, the metal has experienced a 22% pullback in the last six weeks. This shift, however, has kept analysts and experts from maintaining their optimism about the long-term potential of nuclear fuel. Despite the setback, industry insiders suggest that the market has likely established a new baseline, supported by robust demand forecasts and supply constraints.

“We have reached a bottom," said Jonathan Hinze, president of the nuclear industry research firm UxC. Speaking to Bloomberg, Hinze highlighted uranium’s enduring fundamentals, underpinned by increased demand and a supply that is yet to catch up.

While current futures trade at $88.50 per pound in New York, a decrease from February’s 16-year high, they still exceed last year’s average price, reflecting ongoing market resilience. The bullish sentiment towards uranium stems from a growing supply-demand gap and escalating global interest in nuclear power as a solution to combat climate change.

According to the Nuclear Energy Agency, 60,000 tons of uranium are necessary to fuel the world's 436 operating nuclear reactors annually.

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Projections from producers like Cameco (NYSE:CCJ) point towards looming supply deficits. While the International Energy Agency forecasts a 200 million pound demand by 2040, the world's largest producer, Kazatomprom (OTCPK: NATKY), projects a global shortfall of 21 million pounds by 2030, increasing to 147 million by 2040.

Geopolitical factors further complicate the supply outlook, with the U.S. proposing a bill to ban imports of enriched Russian uranium, which the Senate has received.

Faced with an increasingly uncertain future for nuclear fuel, countries worldwide are scrambling to secure the supply for their power generation. Sweden's Climate Minister Romina Pourmokhtari has announced plans to lift the uranium mining ban as early as May—a good sign for the EU market, as this Nordic country accounts for 80% of the EU's uranium deposits.

Meanwhile, the Australian Chamber of Commerce and Industry (CCI) has called on the state government to reassess the uranium ban. Per The West Australian's report, the CCI has prepared an analysis estimating that uranium mining could generate at least $650 million in exports and 9,000 jobs. Despite possessing about one-third of global uranium resources, BHP‘s (NYSE:BHP) Olympic Dam is the country’s sole active nuclear fuel producer.

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Also read: BHP To Slash Australian Workforce As Nickel Market Downturn Continues

Image created using artificial intelligence with Midjourney.

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