Categories:
Energy
/
General Market Commentary
Topics:
General Energy
/
General Market Commentary
Is uranium about to breakout?
On Friday, September 14, uranium increased to US$ 27.30 a pound. Is this going to be the breakout indicator? Historically, uranium reached an all time high of US$143 in May of 2007 and a record low of US$7.10 in December of 2000.
Uranium price 2018 and 2010-2018
Uranium demand set to increase
A major percentage of all uranium is used in nuclear power plants to generate electricity. With mounting demand for electricity all across the globe and the growing capacity of nuclear reactors, the uranium market is set for significant expansion. China (with 18 reactors under construction) and Russia are the fastest growing markets for uranium. It is estimated that India, Europe, and the Middle East will also join the uranium party. Over the coming years all these regions are projected to expand their use of nuclear energy and invest in uranium mining operations, which will ultimately drive the global uranium market.
Number of under construction nuclear reactors worldwide as of February 2018
Despite its perceived risks and history, nuclear energy is a relatively green form of power generation, as it is emissions free. New projects are going to be continually needed to meet the increased demand for electricity.
Uranium supply – Low prices fail to stimulate new supply
Current uranium prices are well below what is needed to stimulate new sources of supply. This means we will continue to see global uranium inventories decline. Recent current low prices have made 75% of uranium mines uneconomical, at the same time a few big mines in Australia and Africa are running low on ore. Low ore grades further make the mines uneconomic causing a further scale back or even a possible closure. Prices are so low, it is actually cheaper to buy uranium from mobile storage than it is to mine it. In addition to this, obtaining mining permits is a lengthy process. These factors are expected to limit near term supply to the uranium market.