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Current Price:
U308 $30.85/lb*
Effective
April 5, 2021 (+$0.20 from survey 1 weeks
prior).
The uranium market is
emerging from years in the doldrums as the overhang
from the nuclear disaster in Japan is cleared and
global demand picks up steam.
Two April-2021 research notes from BMO Capital
Markets and Morgan Stanley say today’s price marks a
floor and predict a rally in prices over the next
few years to the ~$50 level by 2024.
The stars seem to be aligning for a new phase of
nuclear energy investment with the US, China and
Europe bolstering the bull case for the fuel this
month.
Although nuclear energy was not mentioned explicitly
in the $2 trillion Biden infrastructure proposal
released today, its federally mandated “energy
efficiency and clean electricity standard” is hardly
achievable without it.
he EU is set to designate nuclear as a sustainable
source of electricity which opens the door for new
investment under the continent’s ambitious green
energy program.
China’s 14th five-year plan released a fortnight ago
also buoyed the uranium market with Beijing planning
to up the country’s nuclear energy capacity by 46% –
from 48GW in 2020 to 70GW by 2025.
There are several factors working in uranium’s
favour, not least the fact that annual uranium
demand is now above the level that existed before
the 2011 Fukushima disaster when Japan shut off all
its reactors:
-
Uranium miners, developers
and investment funds like Yellow Cake (13m lbs
inventory build up so far) are buying material
on the spot market bringing to more normal
levels government and utility inventories built
up over the last decade
-
Major mines are idled
including Cameco’s Cigar Lake (due to covid-19)
which accounts for 18m lbs or 13% of annual mine
supply. The world’s largest uranium operation
McArthur River was suspended in July 2018 taking
25m lbs off the market
-
Permanent closures so far
this year include Rio Tinto’s Ranger operation
in Australia (3m lbs) and Niger’s Cominak mine
(2.6m lbs) which had been in operation since
1978. Rio is exiting the market entirely
following the sale of Rössing Uranium in Namibia
-
Like Cameco, top producer
Kazatomprom, which mined 15% less material last
year due to covid restrictions has committed to
below capacity production (–20% for the
state-owned Kazakh miner) for the foreseeable
future
-
Price reporting agency and
research company UxC estimates that utilities’
uncovered requirements would balloon to some
500m lbs by 2026 and 1.4 billion lbs by 2035
-
Roughly 390m lbs are
already locked up in the long term market while
815m lbs have been consumed in reactors over the
last five years, according to UxC
-
There are 444 nuclear
reactors in operation worldwide and another 50
under construction – 2 new connections to the
grid and one construction start so far in 2021
-
Much cheaper and safer,
small modular nuclear power reactors which can
readily slot into brownfield sites like
decommissioned coal-fired plants (or even
underground or underwater) are expected to
become a significant source of additional
demand.
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Breaking News March 16, 2021:
Uranium Stocks Surge On Flurry Of Producer Purchases In The
Spot Market (click to view); Uranium stocks soared on
Tuesday following a burst of reports from top producers who
are in the market for uranium in the spot market. It started
with Kazatomprom, the world’s largest uranium producer,
which Bloomberg reported may buy the nuclear fuel in the
spot market after a London-based investment company
exercised an option to purchase the metal. Yellow Cake Plc,
which bets on uranium prices, said on Monday that it had
exercised a $100 million purchase option with Kazatomprom.
Yellow Cake also said it plans to make additional purchases
if it sees value opportunities. “We will evaluate our
inventories and it’s possible we will buy material from
market” to cover part of our deal obligations, Askar
Batyrbayev, chief commercial officer at Kazatomprom, said in
interview. The miner’s uranium inventory fell by 21% to
6,761 tons last year as production declined, but remained
within its target range, it said on Tuesday.
Click to see Uranium Futures =>
Uranium Futures
- CME, or
click here
Uranium/Nuclear focused ETFs:
Click to see
Global X Uranium ETF (URA) =>
Uranium
ETF
Other uranium
related ETF style investment vehicles (focused on nuclear
energy but are not limited to uranium mining and are not direct
competition for URA):
Market Vectors Nuclear Energy (NLR),
and Barclays iShares Global Nuclear Energy (NUCL)
Although we often reference
the spot price of uranium, the long-term price is what
really counts as only a small fraction of the metal is
actually traded on spot prices; over six times more uranium
is traded in long-term market prices than in the spot market
price. The long term market price is consistently and
significantly higher than spot. |
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