Uranium’s 22% Price Plunge Is Bottoming Out on Nuclear Future

(Bloomberg) -- Uranium may have lost some sizzle after an electrifying 10-month rally, but analysts and investors aren’t losing faith in the long-term prospects of the nuclear fuel.

After a 22% decline over six weeks, industry experts and analysts say that the uranium market has likely set a new floor thanks to a strong demand outlook.

“We have reached a bottom,” said Jonathan Hinze, president of UxC, a nuclear industry research firm. “The fundamentals are still strong, with increased demand and supply that hasn’t fully responded.”

Uranium futures are trading at $88.50 a pound in New York — down from the 16-year high reached in February, but still well above last year’s average price of $66.60 a pound.

There are indicators uranium’s new floor is at around current levels, Cantor Fitzgerald analyst Mike Kozak said in an interview, predicting that fundamental buyers will come back into the market and drive up prices again.

Bullish investors are betting on the long-term prospects of the radioactive metal due to a growing supply gap and increased demand as governments worldwide turn to nuclear power to counter climate change. Such demand comes as Canada’s Cameco Corp. and Kazakhstan’s Kazatomprom, which together account for half of global supply, warned of supply setbacks in the coming years.

Kazatomprom, the No. 1 producer, said during its March 15 earnings call that it is projecting a 21 million pound supply deficit in 2030 — a shortfall that would multiply to 147 million pounds by 2040.

Geopolitics may also affect the supply outlook. The US introduced a bill in December that would ban imports of enriched Russian uranium — the kind used to fuel nuclear reactors and weapons. The bill needs to be passed by the US Senate and signed by President Joe Biden to be enacted.

Still, with other uranium miners looking to dust off mothballed operations in response to higher prices, there are risks a rally could fizzle out quickly, much in the same way that a boom in battery metals markets turned to bust over the past couple years.

Treva Klingbiel, president of uranium price provider TradeTech, said she doesn’t see demand for nuclear fuel easing any time soon.

“We have a number of geopolitical factors that have a really significant influence on buyer behavior, even though fundamentally nothing has changed” she said. “Buyers can use the spot to tell them the sentiment of the day, but must look at the long-term market to see that it is marching steadily up, it hasn’t taken a hiccup at all.”

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