The Uranium Market is Heating Up — Is it Time to Get In?
After years of sluggish growth and persistently constrained price activity, the uranium sector is finally starting to heat up, raising the hopes of sector bulls.
The spot price of the energy fuel has been rocketing higher since bottoming out in the US$24 per pound range from late December 2019 to mid-March of this year.
Currently trading for US$33.50, the U3O8 spot price has climbed by 36 percent since January, steadily moving higher as diverse factors impact near- and long-term supply and demand trends.
Is this rapid price increase sustainable, and does it mean it’s time for uranium to shine after years in the doldrums? The Investing News Network asked experts to share their thoughts on how the market got here and what could be next — read on to learn what they said.
A brief recent price history of uranium
Chart courtesy of Cameco.
Since the Fukushima nuclear disaster in Japan, the U3O8 spot price has faced huge headwinds, falling from US$60.50 on March 1, 2011 to US$18 in November 2017, a low unseen since the summer of 2004.
Stockpiled supply, steady production and the loss of nuclear reactors continued to weigh on price growth in the years after that, preventing any gains above US$29.
Some optimism reared its head in 2018, when the US government launched a Section 232 investigation into uranium imports — the country is the largest consumer of the energy fuel, yet domestically produces less than 1 percent of its own demand.
Concern around imports coming from Kazakhstan, Russia and China — numbers one, six and eight in terms of uranium production by country — served as a catalyst for the lengthy investigation.
Rumors surfaced that the final decision would include a domestic quota of as much as 25 percent, and there was talk that Canada and Australia — numbers two and three in annual production — would receive friendly trade exemptions.
The uncertainty around Section 232 made the already opaque market more obscure to decipher for the remainder of 2018, and that was further compounded as the deadline for a Section 232 decision was moved back numerous times.
Early 2019 saw some seasonal price movement as the U3O8 spot price hit US$28.90 in January — its highest level for that year.
In mid-July, the long-anticipated Section 232 report was released, and much to the dismay of nuclear sector watchers and participants, it was devoid of any steadfast outcomes, aside from the formation of the Nuclear Fuel Working Group (NFWG). The committee, comprised of market insiders, utilities companies and politicians, was tasked with assessing the entirety of the American nuclear sector.
By January of this year, a pound of U3O8 was moving on the spot market for US$24.63, unable to even gain seasonal price mobility.
COVID-19 sets off flurry of activity
At the end of February, years of inert, snail’s pace activity were upended when US President Donald Trump, without receiving the NFWG’s report, announced his 2021 budgetary plans. Included was funding for a domestic uranium stockpile to the tune of US$150 million annually.