home Demand, Supply, U Uranium primed to extend rally on resurgent nuclear power, say analysts

Uranium primed to extend rally on resurgent nuclear power, say analysts

Uranium prices are likely to extend a blistering rally and end the year more than 50% higher as mounting worries over climate change accelerate a global shift to cleaner sources of energy including nuclear power, analysts said.

Uranium spot prices are expected to climb to $75-$80 a pound by end-December, in a fitting finish to a year that has seen the metal rally about 36% to-date.

At current levels of around $66.25 a pound, prices are the highest since the 2011 Fukushima disaster. They had peaked at $140 a pound in 2007.

Reuters Graphics
Reuters Graphics

“The market has been slowly building higher prices as mining costs rise and nuclear generators look to build stocks to guard against increasingly risky supply-side issues,” said SP Angel mining analyst John Meyer.

“We see prices rising year-on-year for next 10-20 years or till the world finds another source for large scale un-interruptible base load power with a low carbon footprint.”

Demand from nuclear reactors was projected at 65,650 tonnes of elemental uranium (tU) this year, with the World Nuclear Association forecasting it to climb 28% by 2030 and nearly double by 2040 to 130,000 tU.

A push to improve energy security, particularly after Russia’s invasion of Ukraine upended the global oil markets, has also stoked demand, while supplies remain constrained due to under-investment in new production, transportation risks from geopolitical uncertainties and monopoly of state-owned entities.

Meanwhile, utilities are racing to stock up and term contract volume so far this year exceeds 118 million pounds, the highest in over a decade, according to market research firm and consultancy UxC.

For 2023, UxC projects a 66 million pound deficit with 436 operable reactors globally requiring about 195 million pounds.

Reuters Graphics
Reuters Graphics
Reuters Graphics
Reuters Graphics

As a result, spot uranium and uranium miners have been among the top-performing commodity and mining equities groups this year, outperforming the S&P 500 Index’s gains.

The Global X Uranium Exchange Traded Fund (URA.P) has also jumped over 31% this year.

“There’ll be an eventual easing but certainly not before year-end… uranium should have a good run up ahead,” said Liberum mining equity analyst Ben Davis.

Source: Reuters