Uranium Outlook 2019: Supply to Fall, Demand to Rise — Prices to Jump?
Uranium fared much better in 2018 than it did in 2017. Although prices started the year slowly, even experiencing a slight fall in January, they have grown steadily since March.
The U3O8 spot price was at US$29.10 per pound as of November 26, up US$1.55 from October’s price of US$27.55, and up US$7.30 from January’s US$21.80. Dwindling stockpiles are likely behind the incremental price growth uranium has experienced in the second half of 2018.
“Seven years of oversupply since the Fukushima incident finally resulted in production cuts from the world’s largest uranium miners in Kazakhstan and Canada,” said Mercenary Geologist Mickey Fulp.
He added, “removal of excess mine supply from the market has resulted in a 40-percent jump in the spot price since April.”
Read on to learn more about what market watchers think will happen to uranium in 2019. You can also click here to read about key uranium trends in 2018.
Uranium outlook: Price movement to stay positive
In December 2017, the U3O8 spot price sat at US$22.32, and many analysts were predicting that 2018 would be the year for the uranium market to recover ground lost since 2007’s high of US$136.
A brief drop in January and March kept sentiment in check, but since slipping to US$21.30 in March, the U3O8 spot price has gradually grown — as mentioned, it’s up 40 percent since Q2.
This stable price growth is expected to continue into Q1 2019. When asked at this year’s New Orleans Investment Conference if 2019 will be the long-awaited year of uranium, Lobo Tiggre, CEO of Louis James LLC, suggested that 2018 has already been the energy metal’s year.
“Uranium has been going up and down, but up more than down. And I think that’s very important,” said Tiggre. “My technical friends tell me that this is exactly what we want to see — carving out a bottom where we have a series of higher highs and lower lows.”
IsoEnergy (TSXV:ISO) President and CEO Craig Perry sees depleting global stockpiles as one of the main reasons prices should advance in 2019.
“The spot market looks like it is set to continue to tighten, and with very strong demand from Cameco (TSX:CCO,NYSE:CCJ) and financial entities we can expect much higher uranium prices that are sustainable,” said Perry.
“Based on the inbound inquiry we are seeing from investors, and particularly major US and global funds, we think equities valuations are set to perform very well.”
Uranium outlook: Supply to fall
Although uranium performed well throughout 2018, its momentary price drop early in the year along with prolonged production cuts left many still cautious about the future of the energy metal.
In late 2017, Kazakhstan, the world’s top-producing uranium country, announced it would cut production by 20 percent over three years. This output reduction was further exacerbated this year, when Cameco announced it would indefinitely close its McArthur uranium mine and Key Lake mill located in the Athabasca Basin region of Saskatchewan.
“We had expected more significant uranium mine production cuts, and we have now seen this with the cuts being very significant — particularly the closure of Cameco’s Macarthur River, which in oil terms would be akin to Saudi closing off all its taps,” noted Perry. “What we hadn’t expected was that the demand side would pick up considerably — and this is now happening in a major way.”
While decreased production by the largest uranium country and the largest uranium mine has helped the U3O8 spot price rally, demand from the nuclear sector is also driving once-weak prices higher.